BUSINESS BEFORE QUESTIONS

Beverley Freemen Bill [ Lords]

Lords message (29 October) relating to the Bill considered.
	 Resolved,
	That this House concurs with the Lords in their Resolution.- (The Chairman of Ways and Means.)

London Local Authorities bill [ Lords]

Lords message (29 October) relating to the Bill considered.
	 Resolved,
	That this House concurs with the Lords in their Resolution.- (The Chairman of Ways and Means.)

London Local Authorities and Transport for London (No. 2) Bill [ Lords]

Lords message (29 October) relating to the Bill considered.
	 Resolved,
	That this House concurs with the Lords in their Resolution.- (The Chairman of Ways and Means.)

Transport for London (Supplemental Toll Provisions) Bill [ Lords]

Motion made,
	That so much of the Lords Message [29 October] as relates to the Transport for London (Supplemental Toll Provisions) Bill [ Lords] be now considered.- (The Chairman of Ways and Means.)

Hon. Members: Object.
	 To be considered on Tuesday 10 November.

ORAL ANSWERS TO QUESTIONS

TREASURY

The Chancellor of the Exchequer was asked-

VAT Returns

Gordon Banks: What estimate he has made of the average annual savings to Her Majesty's Revenue and Customs over the next three years arising from the introduction of paperless value added tax returns.

Stephen Timms: Businesses turning over more than £100,000 per year, and all newly registering businesses, will be required to file online from 1 April. Savings of about £4 million a year are expected within three years as a result, but the main reason for the change is to make the service work better-fewer errors, faster turnarounds and an extra seven days before businesses have to pay the tax due.

Gordon Banks: I thank my right hon. Friend for his answer-and, indeed, my hon. Friend the Member for Vale of Clwyd (Chris Ruane) for lending me his pen earlier. Has my right hon. Friend considered the impact that the changes could have on some small businesses that reach the £100,000 threshold, but for which a paperless VAT return might not bring a saving, but a cost, especially in these hard economic times?

Stephen Timms: Yes, we have been thinking about that. We have consulted and will announce our conclusions shortly. However, we have provided quite substantial financial help to businesses signing up to online filing-£900 million in total before the scheme closed earlier this year. I can reassure my hon. Friend that we will provide a detailed, step-by-step guide to registering for online services in the February letter that will set out the requirement to file online. The change will bring benefits to HMRC and to businesses as well.

Richard Ottaway: Given that a survey by the Revenue showed that most businesses were totally unaware of the obligation, how did the Government get on with their target that at least half of businesses would be filing their returns electronically by March 2008?

Stephen Timms: We are making very good progress, and there will be-indeed, there already has been-a substantial campaign to inform businesses of their obligations. Over the next few months more efforts will be made to ensure that everybody is aware of them. Telephone support, for example, will be available to businesses that have queries, and help will also be provided through a programme of presentations and drop-in sessions. Most people will have to make their first online return next July, so we still have a number of months in which to advise businesses, and we are determined to get this right.

Michael Moore: Will the Minister assure us that he will devote enough management time and resources to this stage of reforms, so that we can avoid the utter chaos experienced by many of my constituents with more recent reforms? As a result of the latter, for many people it is taking months to get thousands of pounds of tax that is their due repaid.

Stephen Timms: Of course, one of the great strengths of filing online is that it speeds up the whole process-for exactly the reason that the hon. Gentleman set out. We have had very good experiences, for example, with online filing of self-assessment returns, and I am confident that those benefits will be repeated when businesses go online for VAT filing and other taxes.

Unemployment

Derek Twigg: What steps he is taking to ensure that additional Government funding is provided for areas most affected by rising unemployment.

Liam Byrne: Since the pre-Budget report, more than 3 million people have been moved off unemployment benefits. Across the country, a targeted effort has been made to assist those communities most hit by unemployment, including initiatives such as the working neighbourhoods fund, which is worth more than £1 billion, and the new £1 billion future jobs fund designed to create 150,000 jobs.

Derek Twigg: The campaign to end child poverty today released a report highlighting the impact of unemployment on children and families. What measures is my right hon. Friend taking to prevent unemployment from meaning poverty for children?

Liam Byrne: As I am sure my hon. Friend would agree, the best route out of poverty remains the prospect of work, which is why we have been so determined over the past year to take combined action on monetary policy and fiscal policy, which together are now supporting about 500,000 jobs. However, in addition, we realise that some communities need targeted help, which is why the future jobs fund will seek to create more than 6,000 jobs in his region. On top of that, of course, is the important role of tax credits, which are now supporting 20 million people and helping the poorest families in this country to the tune of more than £4,500 a year.

Michael Fallon: Given rising unemployment, and the fact that this country has been in recession for longer than any of its major competitors, how can Ministers still claim that we were better prepared?

Liam Byrne: The truth is that the recession is hitting different countries differently. If we look at the United States, the unemployment rate is 10 per cent; if we look at France, the unemployment rate is 10 per cent; and if we look at Germany and Japan, the fall in their respective gross domestic product is greater than ours. The fact that we have been able to put in place a fiscal stimulus worth 4 per cent. of GDP, as well as keeping interest rates low-together supporting up to 500,000 jobs-is in part because we went into this recession with the second lowest debt in the G7.

Chris Ruane: I concur with my hon. Friend the Member for Halton (Derek Twigg) that Treasury resources should be targeted at specific areas. They should also be targeted at specific projects, such as the city strategy, the future jobs fund and the fit for work programme, all of which exist in my constituency, all of which are putting people back to work and all of which are under threat from that lot over there on the Tory Benches.

Liam Byrne: My hon. Friend has put his finger on precisely the point. Over the course of this year, the Opposition have said consistently that we cannot afford a fiscal stimulus. That was repeated month on month, until the shadow Chancellor's recent speech, when he began to nuance their position. The truth is that without the support that we have put in place over the past year, the jobs that we are now supporting, such as the 150,000 jobs supported by the future jobs fund, would be in jeopardy.

Stewart Hosie: With the Government's fiscal stimulus ending, quantitative easing ceased, the VAT cut being reversed and departmental cuts already in the pipeline, there is deep concern that this removal of assistance from the economy will force unemployment even higher. Is this therefore not the time for the Government to make the earliest possible statement that they will permit a further year's reprofiling of capital expenditure, as the most effective way to protect and preserve jobs?

Liam Byrne: None of the measures that the hon. Gentleman mentioned has been stopped. In the pre-Budget report and in the Budget, my right hon. Friend the Chancellor was clear when he said that the measures that we have put in place have to be targeted and have to last only as long as the problem exists. That is why it is quite right that as recovery returns to our economy, some measures should be retired. However, those that are still needed, such as measures to support jobs or businesses' cash flow, are set to continue. Also, as the hon. Gentleman knows, the Bank of England is still to reach a decision on quantitative easing.

Barry Sheerman: Is my right hon. Friend aware that in west Yorkshire we are coming out of recession and doing very well, but that we still need some help from better investment in public sector jobs, to move them from the south and London up to Yorkshire?

Liam Byrne: The Government have actually moved more jobs from London out into the regions than we set targets for, but that process needs to continue, and I am determined to see that it does.

Bingo Industry

Philip Davies: If he will bring forward proposals to reduce the level of taxation applied to the bingo industry.

Sarah McCarthy-Fry: We have had continued dialogue with the bingo industry, including before and since the Budget, on the impact of the tax regime. I last met the industry just three weeks ago, and that dialogue will continue. However, I am sure that the hon. Gentleman is aware that tax policy decisions are taken and announced in Budgets and pre-Budget reports.

Philip Davies: The Government have increased the taxation on bingo to 22 per cent., whereas tax on other forms of gambling is 15 per cent. Bingo plays an important part in local communities, but many clubs are shutting up and down the country. What have this Government got against bingo?

Sarah McCarthy-Fry: I can assure the hon. Gentleman that we value the bingo industry and recognise the important part that it plays in the community. I remind him that 22 per cent. is the average across the gambling industry, that the effective tax rate in 2003 was 35 per cent. and that, on the information that the bingo industry gave us before the Budget, the effective tax rate was 24 to 25 per cent.

Kelvin Hopkins: I have raised this with my right hon. and hon. Friends on the Front Bench before, but is it not more sensible to tax the more dangerous forms of gambling more than the innocent forms, such as bingo?

Sarah McCarthy-Fry: I do not think that we are in the business of grading types of gambling. As I have said, we recognise the important part that bingo clubs play in the community, and all these things are taken into account when such decisions are made.

Greg Hands: When the Finance Bill went through, we were told that the overall tax burden on bingo would not rise. The industry disagreed, and indeed, a report from Ernst and Young that landed with the Minister last month concluded that the tax had actually gone up. When will she finally admit to the House that the Treasury got its sums wrong on bingo?

Sarah McCarthy-Fry: As I told the hon. Member for Shipley (Philip Davies), I met representatives of the Bingo Association just a few weeks ago, and we discussed the report from Ernst and Young. That report is still with officials, and it is being assessed. As I have said, these decisions are taken in the pre-Budget report and in the Budget, and the information on which we based the Budget decisions last year was based on figures that the Bingo Association gave us. If it is now giving us different figures, it makes sense that we should take our time to assess them.

Bank Liabilities

Jim Cousins: What the liabilities will be of the proposed (a) good and (b) bad banks to be formed from Northern Rock and Bradford & Bingley.

Alistair Darling: Northern Rock's total liabilities were published in its half-year results. The split between the two banks will be set out once the business plan is finalised. Bradford & Bingley's liabilities are published in its annual report.

Jim Cousins: I thank the Chancellor for that answer, but he will know that many thousands of home owners are likely to be left behind with the £50 billion to £60 billion in the old Northern Rock mortgage book. They are not well off, and they are not rubbish, as Opposition Members are so keen to say. What sort of future, and what sort of mortgage deal, will they have?

Alistair Darling: My hon. Friend raises an important point. The proposal is to split Northern Rock so that there is a new bank that will accept deposits and lend money for new mortgages. The majority of mortgages will remain in the Northern Rock asset management part of the branch. People who have mortgages with Northern Rock will be written to by the institution before this division happens. I am very anxious to ensure that people are treated in a similar way, no matter whether their mortgage is held by the Northern Rock bank or by the Northern Rock mortgage asset-holding company, and I have had discussions with the chief executive of Northern Rock so that we can ensure that that happens.
	I should like to say two other things, if I may. One is that what is now happening demonstrates the wisdom of our intervening in the first place to save Northern Rock, to nationalise it and now to see it through to recovery. My second point is that, although some jobs were unfortunately lost, there are more than 3,500 people employed in Northern Rock. That is good-quality employment in a region that needs that employment.

Vincent Cable: Can the Chancellor explain what process is being put in place to ensure that Northern Rock's good assets, of which there are undoubtedly many, are not sold off cheaply to the private sector while its bad, toxic debts-including those that resulted from 125 per cent. mortgages-are left with the taxpayer?

Alistair Darling: Again, it might be helpful if I make the point that the mortgages that will be held by the Northern Rock mortgage asset company are not all what we might characterise as bad assets. There will be some-there is no doubt about that, given what happened at Northern Rock, especially towards the end-from which the company will not get its money back. However, the majority of the assets in that company are performing-that is, the people who have them are meeting their loans. In other words, they are perfectly good loans. The reason that we have divided Northern Rock up is that, otherwise, we would have had to put even more capital into it. What I am proposing means that we can sell off the Northern Rock bank-in the not-too-distant future, I hope, when it is right to do so-and get it back into the private sector. The other assets will need to be managed over a longer period of time. As conditions improve, however, I hope that many of those loans will come good again and we will be able to get our money back.

Vincent Cable: But what is the hurry? As I understand it, the European Commission has set no timeline for this process-unlike with the Royal Bank of Scotland. Our experience of other countries, such as Sweden, is that this problem could take 10 years to sort out, so why are the Government putting forward this proposal now? They run the risk of getting very bad value for money for the taxpayer in a premature sale.

Alistair Darling: I have said on many occasions in this Chamber and elsewhere that we are in no hurry to sell at all. Indeed, we will not sell these assets in relation to Northern Rock until the price that is offered is right and we can get our money back. It is also worth bearing in mind that, of the original £29 billion that was lent to Northern Rock, the amount outstanding is now £14 billion, so we are on the right track. We are in no hurry to sell at all. I recall having said that to the hon. Gentleman on at least two occasions at previous Question Times, and it is not entirely clear why he seems so reluctant to accept that assurance.

John McFall: Is it not the case that about 90 per cent. of the mortgages held by the Northern Rock management asset company, while having risky characteristics, could come good in the long term? That being the case, will the Chancellor take on board the issue of competition? We know that the British banking system suffers from too little competition. In the process of disposing of Northern Rock-at the Government's leisure-will he not rule out the possibility of the mutualisation of the company?

Alistair Darling: My right hon. Friend is right about the first point: payments are being met on the majority of these loans, and there is every reason to suppose that they will be redeemed, so they will not be a loss to the company. Inevitably, as I said to the hon. Member for Twickenham (Dr. Cable), there will be some cases where, because of what Northern Rock was up to towards the end when it was getting into difficulties, there may be continuing difficulties, but perhaps they can be managed out in time.
	I shall return to my right hon. Friend's second point about competition when I shortly make my statement on banking reform. I want to see more competition on the high street for mortgages and for loans to small and medium-sized businesses, and I believe that Northern Rock will form an important part of that policy. We are not in an immediate hurry to sell, as I said, but I hope that the proposed split will take place sooner than would otherwise be the case-it might be several years.
	On mutuality, I would like to see more diversity in the banking system. I have always wanted to support the building society sector. I would just say in relation to Northern Rock that we cannot put any more public money into it. It is just not possible-state aid rules would preclude it-to do so. Of course, anyone seeking to take over Northern Rock would need to have regard to the fact that it is necessary to ensure that the taxpayer is repaid. I have no difficulty with the concept of a mutual, certainly in principle, provided that funds for that came from outside Government sources.

Philip Hammond: The liabilities in respect of both Northern Rock and Bradford & Bingley have been taken on by the taxpayer because the elected British Government formed the view that this was the best course of action. The Chancellor has previously taken a robust line on the issue of fiscal sovereignty, insisting that decisions on bank bail-outs that impose a burden on the British taxpayer can be made only by the British Government. Unfortunately, the draft proposals under consideration in the European Council do not reflect that view, so will the Chancellor take the opportunity today to reiterate that red line and to confirm that under no circumstances will the Government agree to a structure that could allow an unelected European regulatory body to order a British taxpayer-funded bail-out of a bank?

Alistair Darling: That is a bit rich on the day when the Conservative party is throwing in the towel on its key promise on Europe, but there we are. Yes, I did judge it right to intervene and to nationalise Northern Rock, and I think that most people accept that that was the right thing to do. It is only the Conservatives who were against doing that. Equally in relation to Bradford & Bingley, we used the very legislation that the Conservatives opposed in order to resolve the problem over the weekend.
	The hon. Gentleman is asking about the proposals from the de Larosière report that came before the European Council earlier this year. We have made it absolutely clear that we believe that domestic regulation ought to be a matter for our regulators. We do see a case for a European fiscal stability council, because that is important, and we do also see a case for far more collaboration and co-operation, as that would have avoided some of the problems we had with the Icelandic banks, which must be to our advantage. We have made it clear to the Commission, however, that what we agreed to at the European Council in June ought to be implemented as European law, which respects sovereignty at the same time as ensuring that there is a degree of co-operation in a single market. Of course, all that demands an ability to work with allies in Europe, which is something that the hon. Gentleman might want to reflect on, because I do not think-

Mr. Speaker: Order. I am grateful to the Chancellor; I think we got the thrust of his answer.

Small Businesses

Desmond Swayne: What fiscal measures he has introduced to assist small businesses with cash-flow difficulties during the recession.

Stephen Timms: Among other measures, we have extended loss relief, we have deferred the increase in corporation tax for small companies, we have helped businesses spread payments through the Business Payment Support Service and we have introduced the capital for enterprise fund and the enterprise finance guarantee.

Desmond Swayne: There is a gulf between what Ministers say at the Dispatch Box and what is actually happening. Yesterday, at column 782W, the Minister told me in terms that these schemes include PAYE, but when I made representations on behalf of my constituents, Excelsior Coaches, and wrote to the Chancellor, I received a letter back from Revenue and Customs saying that the Chancellor had never mentioned PAYE and that no such scheme for PAYE existed. Will the Minister find out exactly what is going on?

Stephen Timms: First, I agree with the hon. Gentleman on just how important the small and medium-sized enterprise sector is to the UK, accounting as it does for nearly 60 per cent. of the private sector work force. That is why we have gone to such lengths to support those businesses, not least through the Business Payment Support Service. About 150,000 businesses have benefited from those agreements, and PAYE has been included in a number of them.

Geoffrey Robinson: Can the Minister tell us whether the bankers' bonuses have been tied to their meeting the lending promises and engagements into which they entered with the Government, and in particular with small businesses?

Stephen Timms: My right hon. Friend the Chancellor will be referring to the question of bonuses in his statement to the House in a few minutes' time.

David Gauke: Last month we saw a record fall in bank lending to smaller businesses, with a 40 per cent. drop in lending to manufacturing firms. The CBI and members of the Monetary Policy Committee have highlighted lack of credit as a major impairment to the recovery, but at lunchtime today Lord Myners told "The World at One" that there was
	"no problem with the availability of credit".
	Does the Minister agree with the noble Lord, or does he live in the real world?

Stephen Timms: I agree with the Federation of Small Businesses and others who have reported that credit conditions are improving. That is a welcome development. However, I can tell the hon. Gentleman that we will continue to give real help to businesses and reject calls from Opposition Members to let the recession take its course.

Fiona Mactaggart: While credit conditions are improving, a number of small companies are still suffering because they cannot obtain credit. This week I visited Saint Engineering in Slough, a precision engineering company which, although it has even provided components used for a Mars landing, had to operate for 26 days without a bank account because of the unhelpful attitude of bank managers towards small businesses. What can the Minister do to get them on the case?

Stephen Timms: My hon. Friend is absolutely right to draw attention to the importance of supporting innovative businesses such as the one in her constituency, and we will continue to talk to the banks about it. It is encouraging to hear reports that conditions are improving, but they are not yet as good as we would wish them to be, which is why we will continue our support and our efforts with the banks.

UK Economic Growth

Stephen Crabb: What is his most recent assessment of the level of growth in the UK economy compared with those of other OECD economies; and if he will make a statement.

Michael Fabricant: What is his most recent assessment of the level of growth in the UK economy compared with those of other OECD economies; and if he will make a statement.

Alistair Darling: I shall publish my latest assessment in the pre-Budget report.

Stephen Crabb: Is it not the case that all the Prime Minister's and the Chancellor of the Exchequer's fantasy predictions about Britain leading the world out of recession have now been proved false? Can the Chancellor explain why the United Kingdom is still mired in the worst recession, while all the other major economies have returned to growth?

Alistair Darling: I said at the time of the Budget that I did not expect our economy to return to growth until about the turn of the year, and I remain of that view. As the hon. Gentleman may recall, I also said a couple of years ago that I believed the recession would be deeper and more profound than many observers were predicting.
	It is good news for us that America, Germany and Japan are coming out of recession, because they are important markets for us. It was inevitable that the recession would affect countries in different ways and for different periods. The downturn in Germany and Japan at the beginning of this year, for example, was far greater than the downturn that we had experienced. However, the one obvious common feature applying to every country that has come out of recession is the introduction of a fiscal stimulus of one sort of another. The Conservative party is the only party in 186 countries that takes a different view.

Michael Fabricant: Given that the fiscal stimulus in the United Kingdom to which the Chancellor just referred was greater than the fiscal stimulus in any other country in terms of our borrowing as a percentage of GDP, and given that our currency has been devalued against the dollar, stimulating exports, was the Chancellor surprised to find that the United States had emerged from the recession before the United Kingdom, and was the Prime Minister even more surprised-

Mr. Speaker: Order. I am grateful to the hon. Gentleman.

Alistair Darling: In terms of size-and size sometimes matters-I think the hon. Gentleman will find that the German Government's stimulus was slightly larger than ours, although my former opposite number, the right hon. and learned Member for Rushcliffe (Mr. Clarke) said that he was not very much in favour of it. The key point is that Germany, France, Italy, Japan, China and many other Asian countries, and the United States all do the same thing when faced with the most severe downturn in modern times: they put money into the economy to support people and businesses. That is why, throughout the world, the confidence that we now enjoy is far greater than it was six months ago.

Rob Marris: May I urge my right hon. Friend to reject the shallow short-termism from those on the Opposition Benches? It looks as though the UK will have slower growth coming out of the recession, but also a shallower recession. Will my right hon. Friend say what has happened and what will happen in terms of the size of our economy as against those of comparable OECD countries between, for example, 2005 and 2015? Let us look at the medium term.

Alistair Darling: I am sure-and I certainly hope-that you would rebuke me, Mr. Speaker, if I were to try to read out a table giving all that information immediately, but my hon. Friend makes the general point that the measures we are taking are making a difference. The scrappage scheme, which is part of the stimulus and which has been opposed by the Conservatives, has meant that Nissan has taken on more workers in Sunderland and has reported an increase in its small car sales. Honda is also reporting an increase in its sales after having had a lay-off for the first six months of the year. I say to the Conservatives that the point at issue is that Government action can and does make a difference; that is the difference between the two of us. We must continue to support our economy until we have made sure that the recovery is established and we can then start the necessary consolidation. That is very important, and I am sorry about the Conservative party's approach. Of all the 186 members of the International Monetary Fund, there is not a single country that believes in and supports the stance the Conservatives have taken.

George Osborne: Given that all the other major economies are now growing, what exactly did the Prime Minister mean when he said:
	"This Chancellor is leading...the world...out of recession"?-[ Official Report, 3 June 2009; Vol. 493, c. 268.]

Alistair Darling: I do not recall that he singled me out in that way, but what I would say to the hon. Gentleman-I have been saying this for some time now-is that the difference between the two of us is that when we were faced with a severe downturn I believed that the right thing to do was to use the spending power of Government to ensure we supported our economy. All the countries that have now come out of recession or are coming out of it have had that same thing in common. They have all been affected in different ways-sadly, America has had higher unemployment than us-but the Governments of all these countries decided that to do nothing and let the recession take its toll was unacceptable. Instead they have taken the necessary action, and it is bearing results.

George Osborne: I am sorry that the Chancellor does not remember the compliment the Prime Minister paid to him, but the Prime Minister said in June 2009-which was, in fact, also the month in which he was trying to sack his Chancellor-that the
	"Chancellor is leading...the world...out of recession."
	The problem is that the British Government do not have a simple answer to the simple question why this country is still in recession when the rest of the world is recovering. The Chancellor now says that he will hit his Budget forecast that by the end of the year the economy will be growing-and, of course, we hope he is right about that-but he knows that the Budget forecast included a prediction that the economy would shrink by 3.5 per cent. this year. Is he still confident that that growth prediction will be hit, because it would require an annualised growth of 24 per cent. in the final quarter of this year if he is to be accurate?

Alistair Darling: I believe I said at our last Question Time that, in common with other countries, the downturn in the first quarter of this year-and, indeed, also in the last quarter of 2008-was more severe than people had thought. I repeat the point, however, that the hon. Gentleman's answer would have been to do absolutely nothing. As my right hon. Friend the Financial Secretary said, until the hon. Gentleman tried to nuance the Conservatives' position in his press conference last Monday, he has said time and again that he would not have done anything-he would not have supported people, and nor would he have supported businesses, to get through this recession. Indeed, most informed commentators take the view that what we have done is right. It is a view that is accepted by the OECD, the International Monetary Fund, the CBI and the Federation of Small Businesses. The Conservatives alone took the view that they would do absolutely nothing, and I believe that they did so on the entirely cynical calculation that if what we did did not work, they would say they were right, and if it did work, they would say the recovery would have happened anyway. They are wrong on this-they are fundamentally wrong on perhaps the most important issue of the day.

International Development

Tom Clarke: What recent discussions he has had with the Secretary of State for International Development on proposals to ensure the Government meet a target of allocating 0.7 per cent. of gross national income to overseas development assistance by 2013.

Ian Pearson: Treasury Ministers and officials have meetings on a wide variety of issues, including this topic, with a wide variety of public and private sector organisations. The Government remain committed to meeting the target of allocating 0.7 per cent. of gross national income to overseas development assistance by 2013, and we will set this target in legislation.

Tom Clarke: Is my hon. Friend aware of any discussions involving those who recognise that ODA funding has also got to be matched against the need for increased resources to combat climate change, and will we set out our stall ahead of the Copenhagen summit?

Ian Pearson: My right hon. Friend is absolutely right, in the sense that one of the key things that many of the poorest countries in the world face today is not just the challenge of getting out of poverty, but having to adapt to climate change, which will hit some of them the hardest. That is why it is vital that we do agree on climate change financing in the run-up to Copenhagen. This will be discussed by G20 Finance Ministers at the weekend; however, it is important that it be seen as separate from the funding that will be provided to help some of the poorest countries out of poverty.

Julie Kirkbride: If I remember correctly, back in 1997, the Labour Government had the aspiration of 0.7 per cent. of gross national income being spent on overseas development. Why, therefore, is it in the last year of the Labour Government that they are proposing to put that into legislation?

Ian Pearson: We will not take any lectures from the Conservatives on overseas aid, given that they slashed the budgets year on year. We have seen sustained improvement in the amount of money going to help some of the poorest countries as a result of the 12 years of this Labour Government; indeed, it is one of the things I am most proud of. We have said that we will meet our interim target of 0.56 per cent. by 2010. We are on track to do that, and we will also, as my right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) clearly pointed out, lead the way in having a climate change deal that will help the poorest countries of the world.

Time-to-Pay Arrangements

Ken Purchase: What recent assessment he has made of the effect on small businesses of the time-to-pay arrangements operated by Her Majesty's Revenue and Customs.

Stephen Timms: The Business Payment Support Service was introduced last November. Since then, more than 220,000 time-to-pay arrangements have been agreed with 150,000 businesses-employing between them some 600,000 people-enabling them to spread tax payments of almost £4 billion.

Ken Purchase: These arrangements are very welcome in my constituency, where people have struggled, but does the Minister accept that these and other measures that have been introduced are really a cover-up for the catastrophic failure of profit-maximising finance capitalists who have failed our small businesses? Is it not now time to look for more responsible banking, to remutualise those organisations that have gone to the free market, and to reject the idea that "competition, competition" is anything other than a mantra?

Stephen Timms: We are certainly looking for changes in banking, as my right hon. Friend the Chancellor of the Exchequer will be setting out in a few moments' time. However, I would not agree with my hon. Friend in characterising this scheme as a cover-up, because it has given a lifeline to thousands of businesses in constituencies such as his. One of the most impressive things about it is the very good record of repayment. More than 90 per cent. of the repayments due come in on time once an agreement has been made. It is a very good model for the future.

Capital Projects

Gwyn Prosser: What recent assessment he has made of the effects on the economy of his Department's policy of bringing forward spending on capital projects.

Liam Byrne: Bringing forward capital spending is part of a response to the recession that is now supporting up to half a million jobs, helping 300,000 people stay in their homes and helping 150,000 businesses with their cash flow. We forecast that these measures will return us to growth by the end of the year.

Gwyn Prosser: Advancing building programmes is also good news for us in our constituencies, but what can we do to encourage hospital trusts that do not have access to capital funds and that rely on their surpluses to advance their programmes and create jobs and construction programmes earlier?

Liam Byrne: We are very proud of the fact that under this Government, the national health service now has 100 new hospitals, which have been built through the increases in capital expenditure. That means that the NHS estate is now in a completely different shape. We plan capital spending to continue at different kinds of levels in the future, but even by 2013-14 we expect capital expenditure to be higher than the levels we inherited. Of course, there will be trusts around the country that will also choose to use the different flexibilities that they have, such as the private finance initiative or internally generated resources, but our determination to carry on with the business of modernising the NHS is undiminished.

Graham Stuart: Will the Minister consider using capital expenditure to reduce the debt on the Humber bridge? In particular, will the Treasury agree to carry out its own analysis of the economic impact of the tolls on the local area and on the Exchequer, and match the promise made by my hon. Friend the Member for Tatton (Mr. Osborne)?

Liam Byrne: I will certainly be happy to consider evidence such as that the hon. Gentleman mentioned and any other evidence that he would like to bring forward.

Clive Betts: Is my right hon. Friend aware that at a recent meeting of the Yorkshire and the Humber Regional Committee, representatives of the CBI, the chambers of commerce, the Engineering Employers Federation-the EEF-and the Federation of Small Businesses all welcomed the Government's stimulus package, including the bringing forward of capital projects? They said that although the economy recovery has started to happen-

Mr. Speaker: Order. There is pressure on time and we must make progress. I want a question with a question mark-one sentence please.

Clive Betts: Those organisations questioned whether it was right to withdraw the stimulus package now and whether doing that would have a disastrous effect on economic recovery.

Liam Byrne: As my right hon. Friend the Chancellor said, the fiscal stimulus that we have been able to put in place, because we went into this recession with low levels of debt, together with low interest rates, is now supporting up to 500,000 jobs. The disastrous thing to do would be to withdraw that stimulus too quickly. The Conservative party has set its face against a fiscal stimulus and it is for early withdrawal of that stimulus, which would be such a disaster for our economy.

Tax Avoidance

David Taylor: What steps he is taking to reduce the incidence of tax avoidance.

Stephen Timms: We have taken action domestically and internationally to change the game for those who bend rules on tax. We detect avoidance early, we tackle it quickly and the tax avoidance disclosure system introduced in 2004 has helped to close more than £12 billion in avoidance opportunities.

David Taylor: The Tax Justice Network has done the world a great service in producing its global index of secrecy, which reveals the most secretive financial centres-the City of London being the fifth worst. Why cannot we take an international lead in tackling tax avoidance by first ending the clandestine and corrupting culture that permeates the City of London?

Stephen Timms: We have led work internationally in the G20 on tackling tax evasion and have won plaudits from many for doing so. Her Majesty's Revenue and Customs will be setting up a dedicated tackling tax evasion unit to target those with offshore bank accounts who do not come forward under the current new disclosure opportunity-I believe that my hon. Friend will welcome that. In the G20, we have led a dramatic change on tax havens-there has been a huge amount of profitable activity-just over the past year.

Credit Unions

David Drew: What discussions he has had with the Secretary of State for Business, Innovation and Skills on the potential for the location of credit union activities in post office branches.

Sarah McCarthy-Fry: The Government recognise the potential for closer working between the Post Office and credit unions. I understand that the Post Office and the Association of British Credit Unions Limited have been holding discussions on this subject. The Government will be holding a national consultation on banking services at the Post Office, which we hope to launch by the end of the year.

David Drew: I thank my hon. Friend for that pleasing news, but we have heard these ideas before and it is vital that the poorest among our community, who find it most difficult to borrow, can go to the most trusted institution-the Post Office-to use credit unions. Will she ensure that that happens as a matter of urgency?

Sarah McCarthy-Fry: I absolutely agree with my hon. Friend. He may be interested to learn that back in September I officially opened the first credit union to share premises with a post office, which is in Pollok, in the constituency of my hon. Friend the Member for Glasgow, South-West (Mr. Davidson). One could see the potential for the synergy between the post office and the credit union: they were not just sharing premises; they were also sharing the staff.

Banking Sector Reform

Brooks Newmark: When he last met the Governor of the Bank of England to discuss reform of the banking sector.

Ian Pearson: The Chancellor of the Exchequer and the Governor of the Bank of England meet regularly to discuss a range of issues.

Brooks Newmark: Given that and the fact that when Lehman Brothers collapsed neither it nor the banks actually understood the counter-party risks, has the Minister discussed the right systems and ensured that they will be in place when the system is reformed?

Ian Pearson: As the hon. Gentleman rightly points out, the collapse of Lehman Brothers was of systemic importance to not only the US economy, but the world economy, and he will be very aware of the actions that followed it. The issue has had extensive scrutiny, and he will also be aware of the administration position at the moment. Those lessons have and are being learned, which is one of the reasons why actions have already been taken by the Financial Services Authority and it is another reason why further reforms in the financial services Bill will follow the Queen's Speech.

Anne Begg: May I ask my hon. Friend, as my constituents are also asking, what the Government are going to do in terms of taking up the regulation of the whole financial sector and not just the reform of the banks?

Ian Pearson: As my right hon. Friend the Chancellor has pointed out on a number of occasions, we cannot return to business as usual. Reforms have been implemented already and more action needs to be taken. I am sure that my hon. Friend will want to support the Government's future legislative programme, which will have an important piece of legislation-the financial services and business Bill-contained in it.

Comprehensive Spending Review

Andrew MacKay: When he expects to announce arrangements for the next comprehensive spending review.

Liam Byrne: Departmental budgets are set until April 2011 and, as the Chancellor has made clear, he will set out more detail on his spending plans in the pre-Budget report.

Andrew MacKay: Can we have a guarantee that the arrangements for the spending review will be put in place very quickly? Obviously the people of this country will want to see detailed proposals from the Government ahead of the election.

Liam Byrne: As my right hon. Friend the Chancellor has made clear, the public will be in no doubt about the choice between the two principal political parties and their spending plans at the next election. There is no precedent for when spending reviews should be carried out. They are an innovation that was introduced by this Government, and sometimes they have been produced a year before one spending review expires and sometimes two years before. At a time when there is a degree of uncertainty in the economy, as the right hon. Member for Bracknell (Mr. Mackay) would admit, it would wrong to be too hasty about what budgets will look like in the year of the Olympics and thereafter.

Topical Questions

John Robertson: If he will make a statement on his departmental responsibilities.

Alistair Darling: The core purpose of the Treasury remains as I set out in the last Treasury Question Time.

John Robertson: My right hon. Friend will be aware of the people who desperately need working tax credits. With the volatility in the employment market these days, can he tell me whether there is a shortfall in the uptake of working tax credits and, if so, what does he intend to do about it?

Alistair Darling: In relation to the child tax credit, take-up is about 81 per cent. and lone parents make up about 95 per cent. of that, whereas parents in the lower income bracket make up about 92 per cent. There is quite a high take-up among parents with children. In relation to the take-up of working tax credit among families without children, although 100,000 more people have claimed the working tax credit, we need to do more to encourage people. It is a way of ensuring that people's incomes can be maintained, especially at a time of economic downturn.

George Osborne: May I ask the Chancellor about the forthcoming pre-Budget report? Everyone knows that the date keeps being put back, presumably because the Government cannot agree on what to put in it. The Bank Governor says that the country cannot afford another fiscal stimulus while the Prime Minister is busy briefing Sunday newspapers that he is planning a new spending splurge. As the third person in this unhappy marriage, what does the Chancellor think should be done, or is he just keeping his head down and avoiding the mobile phones?

Alistair Darling: The pre-Budget report will be an opportunity for us to see clearly that the measures that I set out a year ago and in the Budget this year are having an effect. I believe that the measures that we put in place to support our economy, some of which will end this year, such as the VAT decrease, and others of which will continue, such as the time-to-pay measure that was mentioned earlier by my right hon. Friend the Financial Secretary to the Treasury, are having an effect on the economy. Perhaps the difference between the hon. Gentleman and I is that I believe that we need to ensure that we set out plans to ensure that we have growth, because otherwise we face a decade of low growth and low employment. That is the prescription and the counsel of despair that the Conservatives are offering and I do not think that it is the right option for this country.

Gwyn Prosser: We all appreciate the need for pay restraint, especially among the higher paid, but does my right hon. Friend appreciate the demoralising effect it has when we tell low-paid public sector workers that their pay is to be frozen and their jobs threatened? In particular, does he appreciate the impact on hard-working border control officers based in Dover and Calais?

Liam Byrne: We are very proud of our record over the past 10 or 11 years in fixing and improving the pay of some of the people in our public services who make the biggest difference and who work hardest on behalf of this country. However, as the Chancellor has said, once recovery is locked in it is important that we get on with the business of consolidation, which is why we have committed to halving the deficit over four years. We expect people in public services, particularly those who work at senior levels, to show a degree of leadership. That is why the evidence that we have submitted to pay review bodies calls for a 0 per cent. increase for senior groups and for increases of between 0 and 1 per cent. in 2010-11 for other public sector work forces who are not covered by three-year deals. I know that this will sometimes cause a degree of anxiety but we have to get the balance between investing in public services and the pressures of public sector pay absolutely right.

Anne McIntosh: Why is the Chancellor seeking to change the tax status of holiday lets, which are frequently operated on farms by small businesses in rural areas? The proposal will harm precisely those businesses that Treasury Ministers were just saying that they were trying to help.

Stephen Timms: This matter was discussed in the Finance Bill Committee this year. There has been a tax break for furnished holiday lettings for some time but, as it is available for UK properties only and not for properties in Europe, it is no longer clear that it is consistent with European law. We have announced a change, and we will publish an impact assessment of that change at the time of the pre-Budget report.

Alun Michael: Does my right hon. Friend the Chancellor agree that it is very unlikely that Northern Rock would have run into problems if it had remained a mutual? Is that not the best possible reason for him to look proactively for ways to return it to the mutual sector? Would not that be in the long-term national interest?

Alistair Darling: The problems at Northern Rock were substantially caused by a new breed of management that came in and did not seem to understand that terrible problems can arise if one's sole source of funding for lending dries up. It was a management problem as much as anything else.
	As I said in reply to my right hon. Friend the Member for West Dunbartonshire (John McFall), I would like to see more mutuals. However, anyone coming in for Northern Rock would have to ensure that they had sufficient funds to achieve mutualisation. Whether the business is a mutual or a plc, there needs to be capital behind it. That is a question that anyone coming in for the business would need to address.

Peter Bone: Last week, the Prime Minister demoted the Chancellor from No. 2 in the Cabinet to No. 4. Has the Chancellor had a falling-out with the Prime Minister?

Alistair Darling: I do not know where the hon. Gentleman got that news from. However, I can tell him that the Prime Minister and I are agreed that the challenges faced by this country are best met by making sure that we continue to support the economy, and that we get growth, jobs and high employment in the future. That is more interesting to us than rather pathetic party politics.

Derek Twigg: In view of the importance of large capital projects in providing jobs, will my right hon. Friend ensure that the Treasury releases as soon as possible the funding already allocated for the Mersey Gateway bridge if, as is expected, the project is given the go-ahead?

Liam Byrne: This is very much on our radar. I understand that the planning inspector's report following the recent public inquiry is expected to be received in the middle of December. The recommendations will then need to be considered carefully by my noble Friend the Secretary of State for Transport before a decision can be announced. As is normal in these cases, a decision on funding will be taken at that stage. However, I am very grateful for the consistent lobbying that my hon. Friend has done on this subject.

Stephen Crabb: On the repeal of the fixed holiday let rules, will the Minister explain why he did not consult at all either tourism or agricultural bodies before taking this damaging action? That is especially important, given the close relationship between farming and tourism in constituencies such as mine in Pembrokeshire.

Stephen Timms: As I explained earlier, the change was made for a straightforward legal reason. It looked as though the law required it but, as I said, we will publish an impact assessment that will be available for widespread discussion.

Ken Purchase: Does the Chancellor agree that the increasing use of technology and mechanisation in the banking industry has led, dangerously, to many local managers losing a lot of knowledge about, and touch with, their local businesses? If he does agree, what talks will he hold with the banking industry to reskill the banking fraternity in local matters?

Alistair Darling: I agree with the point that my hon. Friend makes. It is important that local bank managers understand the businesses and the affairs of the people with whom they deal. At times they can appear remote, which is something that I have raised with the banks on many occasions. I am not sure that we can go back to the age when there was a Captain Mainwaring behind every bank counter, but perhaps that is something that one or two banks might want to reflect on.

Mark Harper: The Chancellor will be aware of the terms of the deal that has been hammered out between the Treasury and Lloyds Banking Group, which fortunately will safeguard for the moment the future of the Cheltenham & Gloucester branch in my constituency, and the 1,200 jobs in Gloucester. I understand that the terms of that deal have to be finalised by the college of Commissioners in the European Union. Can the Chancellor confirm that that will be done by the end of this year?

Alistair Darling: I certainly hope so, because the present college of Commissioners comes to the end of its term of office this year. We reached an agreement with Commissioner Neelie Kroes at the weekend, and she speaks for the Commission. As I shall explain when I get to the statement, the detail needs to be sorted out, but we have an agreement that is in the best interests of the whole banking sector. I shall return to that shortly.

Ian Davidson: Does the Chancellor agree that the Government were right to reject any advice to join the euro? Given that, does he agree that this is not the time for those who promised a referendum on the Lisbon treaty to go floppy?

Alistair Darling: Our position on the euro has not changed, just as I know my hon. Friend's position on the euro has not changed. But he is right. The Opposition ought to reflect on the fact that they are becoming more and more out of touch with what is happening in relation to Europe. As for their central promise to the electorate on a referendum, that appears to have been junked.

Richard Ottaway: Is the Chancellor aware of the remarks of Lord Myners last night, who said that 70 per cent. of all share transactions are computer-generated in trades lasting only microseconds? Does he have any plans to review the way shares are bought and sold?

Alistair Darling: If that needs to be looked at, we will do that. Before I come to any conclusion, I should like to see what the noble Lord actually said.

Gordon Prentice: Should all Members of Parliament say whether they are resident in the United Kingdom for tax purposes?

Alistair Darling: I should have thought that that would be a precondition for getting elected.

Justine Greening: Last week the Financial Services Authority fined GMAC-RFC for its unfair treatment of 46,000 mortgage customers. The fine was £61 per customer. Is that enough?

Alistair Darling: There may well be a case for reviewing the fines available to the FSA. I am not familiar with the particular case. I will arrange for Lord Myners to write or I will write to the hon. Lady myself, once I have had an opportunity to study what she has said.

Fiona Mactaggart: Today's changes in the housing benefit and council tax benefit rules will put into the hands of families with children whose child benefit is being disregarded about £20 a week per family. What else can the Department do to help to tackle child poverty in advance of the pre-Budget report?

Liam Byrne: As I said in response to an earlier question, the key route out of poverty remains connecting people with the opportunity to work. That is why, as my hon. Friend knows, we have been so determined to take steps to help make sure that people are kept close to the labour market. That is why we have put more than £1 billion into the working neighbourhoods fund, in order to help provide jobs where unemployment is high. It is also why the future jobs fund is so important. It creates more jobs, again targeted on those areas where unemployment is high. That, on top of our determination to see the tax credit system stay in place and on top of changes to the social fund, is making a real difference to those who are finding it toughest in this recession.

Nicholas Winterton: Are the Government concerned about the miserable return that savers, many of them elderly and relying on their savings, get for the investments that they have in banks and building societies, which scarcely covers inflation and the tax that they may have to pay?

Ian Pearson: As the hon. Gentleman will be aware, despite the fact that we have historically low interest rates, rates in the market are in some cases significantly in excess of that. He will also be aware, particularly with regard to pensioners, of the changes that we announced to the ISA regime, which mean that people aged 50 and over can get tax-free savings on their investments. I hope he would welcome that.

Gordon Banks: Predictions today from the EU suggest that the UK economy will grow at a greater rate than many European economies. Does my right hon. Friend believe that that is an acknowledgement that the policies that the Government have followed during the recession and beyond it are and will be the right ones?

Alistair Darling: I will set out in the pre-Budget report my assessment of where we are in relation to future growth. But, as I said earlier, there is clear evidence now that, right across the world, Europe included, supporting our economies was the right thing to do-particularly to try to keep unemployment as low as possible.

Robert Smith: As the Chancellor says, it is vital to support our economy at this time. He will know just how difficult an environment it is west of Shetland when it comes to encouraging investment in oil and gas. At this crucial time for our national energy resources, will he look further at extending the field allowance to try to encourage the investment decisions that, crucially, need to be made soon west of Shetland?

Alistair Darling: I am very much aware of that issue, and as the hon. Gentleman may know I met representatives of the oil industry in Aberdeen about three weeks ago, when we discussed the prospects not just west of Shetland but in the North sea generally. I am anxious to ensure that we do everything we can to encourage the extraction of oil and gas, which is important to us in terms of security of supply. I am aware of the particular problems in relation to the conditions west of Shetland, and we shall continue to see what we can do to try to resolve that problem.

John Redwood: Is there any prudential limit to how much the Government can and should borrow?

Alistair Darling: My answer is the same as when the right hon. Gentleman asked the question last time. It is right that borrowing should rise as a correct measure to deal with the current downturn, but of course as the recovery becomes established we need to take steps to ensure that we can reduce our borrowing. At the Budget, I set out proposals to cut our deficit by half over a four-year period, but, to have cut borrowing now, and public expenditure dramatically now, would have tipped us into a deeper and more prolonged recession. That would have been more expensive and damaging, and it would have taken us longer to get out of the problem.

Greg Mulholland: I do not know how many pubs the Chancellor is now barred from as a result of his ill-judged and damaging rise in beer duty, but will he consider the effect of the VAT increase when it returns to 17.5 per cent. in January? In the light of that, will he reconsider the beer duty rises from next April? CAMRA reckons that, combined, they will put another 5p on the price of pint of beer, damaging community pubs.

Stephen Timms: We are concerned about what happens on the night of 31 December. I said in May that businesses that are open across midnight, such as pubs and clubs, will be able to continue charging VAT at the lower rate. I can confirm today that they will be able to do so until 6 am on the morning of 1 January 2010. That will be very welcome news to institutions such as those about which the hon. Gentleman is concerned.

Banking Reform

Alistair Darling: With permission, Mr Speaker, I should like to make a statement on the banks in which the Government have shareholdings. This morning the Treasury, Lloyds Banking Group and the Royal Bank of Scotland issued market notices in the usual way.
	In October last year, I set out a range of measures designed to prevent the collapse of the banking sector. Those measures are working, and countries across the world took very similar steps over the following weeks. But the uncertainty in global financial markets had a very serious impact on confidence, resulting in a world recession. That in turn worsened the outlook for our economy, leading to higher losses for UK banks.
	It was clear that further action was needed to strengthen the banks, and in January we announced an asset protection scheme to prevent a further shock to confidence, and to ensure that lending could continue. We continued to support the economy through fiscal and monetary policy, and we co-ordinated a global policy response at the G20 London summit in April. Those measures are working, too: fears of a global depression have receded and market confidence has started to return. As a result, we are now able to achieve our objectives on financial stability and banking reform at a lower overall cost to the taxpayer.
	The asset protection scheme that I announced in January has played a vital role in supporting confidence in financial markets. Let me remind the House of the key features that I set out back then. The scheme provided insurance against losses arising on a pool of bank assets, and in return the banks paid a fee in the form of shares. The effect of the scheme is to strengthen the capital position of any bank taking part in it, but that of course carries a risk of exposure for the taxpayer. The scheme was open to all major UK banks, but in the event, improved market conditions meant that only two banks decided to participate.
	Since then, further improvement in market conditions means that Lloyds has been able to develop a better plan. It now does not need to participate in the scheme, which will significantly reduce the cost and exposure for the taxpayer.
	I will now explain in detail our proposals to restructure the banks better and also to make them stronger. Turning first to Lloyds, following the recapitalisation last October, the Government owned 43 per cent. of the bank. In March we reached an agreement in principle with Lloyds on its participation in the asset protection scheme. This would, through the fee, have increased its capital by over £15 billion, increasing the cost to Government, with our stake in Lloyds rising to 62 per cent. We agreed then in principle to insure £260 billion of assets, giving us a very large contingent liability. But now that market conditions have improved, we have agreed a better proposal for Lloyds, to bring in substantial private capital and reduce taxpayer exposure.
	So Lloyds has announced today that it will raise £21 billion in the open market. This capital raising is fully underwritten by commercial banks. As a shareholder, the Government have the option to take up part of the newly issued equity. If we did not do so, the value of the existing taxpayer shareholding would be diminished. To protect the value of our shares, we have therefore decided to take up our share of this new capital, investing £5.7 billion net of an underwriting fee. By raising capital in the markets, Lloyds will begin its transition from state support to private finance, and no longer need the insurance of the asset protection scheme. Because Lloyds has benefited from the existence of that scheme since March, it has agreed to pay the Treasury a fee of £2.5 billion and to reimburse our costs. Today's decisions make Lloyds a stronger bank and provide better value for the taxpayer, ending the exposure of the taxpayer through the insurance scheme, with a substantial fee in return for the insurance provided to date, and a substantial capital contribution from the private sector, while maintaining our shareholding at 43 per cent.
	I now turn to the Royal Bank of Scotland. It is a bigger bank than Lloyds, with a more complex balance sheet and a greater exposure to losses, mainly due to its purchase of the Dutch investment bank ABN Amro. Under February's agreement in principle, the Government said that they would insure £325 billion of assets through the asset protection scheme, as well as providing an additional capital injection of £13 billion, a second tranche of capital amounting to £6 billion, and a further £6.5 billion-worth of capital support through additional shares issued to pay the fee. Together, this would have increased RBS's capital by £25.5 billion, taking the Government stake to 84 per cent.
	Before we could reach a binding agreement, we needed to carry out due diligence on the assets and to ensure that the final terms were consistent with the then emerging European Commission guidelines. The restructuring guidelines were published in July, following extensive work with the UK and other countries. We have also now completed, with the Financial Services Authority, due diligence work on the RBS balance sheet. As a result, we are making a number of changes to the terms of the scheme, which will improve incentives and share risks better with the private sector.
	Although market conditions have improved, RBS still needs to do more to be able to stand on its own feet. So we will continue with our plan to invest £25.5 billion of capital in RBS-but there are three key changes. First, there will be a £43 billion reduction in the pool of assets covered by the insurance scheme, which reduces the Government's contingent liability. Secondly, the first loss on these assets-payable by RBS-will be increased from £42 billion to £60 billion, which further protects the taxpayer. Thirdly, in return, RBS will pay an annual fee of £700 million for each of the next three years, and £500 million per year thereafter, which gives it an incentive to leave the scheme as conditions improve. When it does leave the asset protection scheme, it must have paid a minimum fee of £2.5 billion, or 10 per cent. of the actual capital relief received.
	To reflect the increase in the first loss, amounting to £18 billion more payable by RBS, we will no longer require RBS to give up its tax losses, which it estimates at between £9 billion and £11 billion. In the unlikely event of a severe downturn, it may be necessary to provide up to £8 billion contingent capital, but this will be triggered only if there is severe stress, taking its core capital ratio down to 5 per cent. Again, in return for that, RBS will pay an annual fee of £320 million for as long as the contingent capital is available.
	In the case of RBS, the overall level of Government support will remain broadly the same as I announced in February, but this revised deal is better structured, with better risk sharing and greater incentives to exit. There is a higher first loss payable by RBS-£60 billion, up from £42 billion. There are better incentives, with a fee of £700 million for three years and £500 million thereafter, and fewer assets to be insured-£282 billion instead of £325 billion. I will provide the House with full details of the operation of the scheme when the final agreement is signed and approved by the Commission.
	As part of these restructured deals, we are also pushing forward reform at the banks, with improved lending and remuneration policies. Both Lloyds and RBS will be in a stronger position to continue lending. Lloyds will increase lending capacity this year and next, with an additional £11 billion for businesses and £3 billion for home buyers in each year. RBS will continue to meet its lending commitments of £25 billion this year and next, as I indicated earlier this year. Both will publish customer charters on good practice, particularly on small and medium-sized enterprise lending, increasing transparency and improving loan conditions for business customers.
	On pay, all major retail and investment banks in the UK need to meet the G20 principles and Financial Services Authority rules, so that bonuses are transparent, variable and with no multi-year guarantees. Between 40 and 60 per cent. must be deferred over a number of years, not paid out immediately, and they must be subject to clawback to ensure that pay is aligned with long-term performance. However, we have agreed with RBS and Lloyds that they will go further than that. For this year, there will be no discretionary cash bonuses, except for staff earning less than £39,000 a year. The executive boards of both banks will have their bonuses deferred in full until 2012. That goes much further than the G20 agreement, and further than any other banks in the world.
	I will continue to strengthen the supervisory regime, building on the proposals that I set out in July, by adopting the recommendations of the Walker review on corporate governance for banks, reforming the mortgage markets and legislating to make banks put in place "living wills", as well as providing enhanced powers and objectives for the FSA, to strengthen regulation further.
	I believe that those steps are better for the taxpayer, better for the banks and better for the economy. As a result, the likely cost to the taxpayer and the risks faced by the public finances have reduced markedly. The total assets protected have been reduced by more than £300 billion, there is more private sector investment and the fees received are better structured. I expect, subject to wider factors, to revise downwards the provision for financial sector interventions in the pre-Budget report.
	As I said in my statement in July, our second objective is to encourage greater banking competition in the high street and for small and medium-sized businesses. Since the financial turmoil started in 2007, the banking industry has become more concentrated in most advanced economies. Over the course of this year, we have been working with the Commission to agree on how to restructure the banks while meeting state aid rules.
	As for Northern Rock, I have already set out my intention to split the bank into two separate companies, and we now have Commission approval for that. That will mean that less capital support is needed to keep Northern Rock lending, and when the time is right it will facilitate a return to the private sector. Lloyds will sell Cheltenham & Gloucester, the Intelligent Finance internet bank, the TSB brand, Lloyds TSB Scotland and some Lloyds TSB branches in England and Wales-altogether, more than 600 branches by 2013. RBS plans to sell its insurance businesses, including Direct Line and Churchill, as well as its commodity trading arm and its card payment processing operation. It will also divest itself of more than 300 branches across the UK, again by 2013. Together, those businesses could amount to about 10 per cent. of the retail banking market in the UK.
	In each and every case, we will insist that those institutions should not be sold to any of the existing big players in the UK banking industry. Lloyds and RBS will each be required to sell their retail and SME businesses as a single viable package to a smaller competitor or new entrant to the market. That, together with Northern Rock, will potentially create three new banks on our high street in the space of five years, which will increase diversity and competition in the banking sector, giving customers more choice and a better service.
	The financial services sector will remain an important part of our economy. Yesterday's job losses announced by RBS and today's job losses announced by HSBC are a reminder that for many employees, these are difficult times. We will do everything we can to work with the banks to help them find new jobs for those affected.
	My proposals today will ensure that we have a strong and vibrant financial services sector in the future. They will mean strong and safer banks that are better able to support the recovery, and more competition and choice for people who use them. I commend this statement to the House.

George Osborne: Once again, Mr. Speaker, the Chancellor tells the House of Commons what he already has spun to every national newspaper-last night, long before any market notices were put out.
	Let us separate fact from Government fiction. First, we welcome the modest break-up of some of those large banking conglomerates-a break-up that the Chancellor wholly opposed when the Conservatives proposed it six months ago, and which everyone knows was wholly imposed upon him by Commissioner Neelie Kroes. We also welcome the ban this year on all significant cash bonuses in these major retail banks-not least because we proposed that a week ago. Again, the Treasury and the Chief Secretary to the Treasury wholly opposed us. Yet again, the Conservatives are setting the agenda.
	However, is not the real story the sheer size of this bail-out? The Chancellor could not bring himself to give us the actual figure in the House of Commons-£39.2 billion, equivalent to £2,000 per family. It is bigger even than the bail-out last autumn, and with the Royal Bank of Scotland, it now breaks a new world record as the single biggest bail-out of any single bank anywhere in the globe.
	Of course, the Chancellor presents this as positive Government action, but he had little choice, because the alternative was seeing RBS unable to fulfil the basic requirements of a solvent bank. However, it results in a bail-out bigger than that of Citigroup and that of Bank of America. Indeed, all of that is going into a bank the former chief executive of which, we must remember, was knighted for banking services by the Prime Minister.
	In return for this huge slug of money, there is still no guarantee that this will get lending flowing in the real economy, help real businesses to stay afloat or keep people in work. The Chancellor wants us to believe that this is a new era for British banking, when in truth the British people are being presented with yet another enormous bill to try to clear up the mess from the old era of irresponsible banking supervision over which this Labour Government presided.
	Let me press the Chancellor on the details-first on the enforced sale of branches and bank businesses. Why did he oppose that when we first suggested it six months ago? He dismissed it out of hand. Is that because-perhaps he could confirm publicly what everyone is saying privately-although he did not want to do it, it was imposed on him by the actions of the European Commission, right up until the weekend? Indeed, during their time in office, this Government have never made any secret of the fact that they have actively promoted the policy of creating a small number of large banks.

Alistair Darling: indicated dissent.

George Osborne: The Chancellor shakes his head. Does he not remember what he said in the pre-Budget report last year? He said that
	"consolidation"-
	of banks-
	"results in stronger and better-capitalised...institutions, which will lead to greater financial stability; more protection for consumers; and better availability of competitive financial products."
	Is that still his view? Does he think that the recent consolidation has resulted in stronger institutions, greater financial stability or more competition? Can he really believe that, after he has seen what has happened over the last year?
	Secondly, let me ask him about the details of this £39 billion bail-out. He said that it was broadly the same as the deal that he put before the House of Commons in February, and presented the various numbers involved in that deal. Of course, what he was actually doing was comparing apples with pears. In February he told us that RBS would get a £13 billion capital injection and a £6 billion contingency reserve-he just added to the total today-and today he says that it is going to get £25.5 billion capital injection and an extra £8 billion in reserve. Will he confirm that this is not the same as the deal he announced in February?
	The Chancellor talks about the asset protection scheme. Again, will he confirm in public what everyone involved in these negotiations is saying in private-that the asset protection scheme he announced in January proved to be unworkable, impossible to negotiate and incompatible with European state aid rules, which is why he has had to go back to the drawing board? When did he realise that the asset protection scheme would not work? Why does he think that the United States has been more successful with its public stress tests in leveraging private capital into its banking system so that, unlike Britain, it is not turning to the taxpayer for further large-scale capital injections?
	Will the Chancellor confirm that the Royal Bank of Scotland will not be paying taxes even when it returns to profit? That is a remarkable circumstance that I suspect will be a feature of several debates in the House over the next few months. What signal does that send to the rest of the global banking sector which is trying to minimise its UK tax bill at the moment?
	On bank lending in the real economy, every time the Chancellor has announced another form of bank bail-out, he has promised that it would lead to more lending. In October the Government said that their banking policy would
	"ensure the flow of money to small businesses and families".-[ Official Report, 20 October 2008; Vol. 481, c. 30.]
	In January they said that their banking policy would
	"get lending going in the wider economy".
	Perhaps they believe that they have succeeded, because Lord Myners has been telling everyone today that there is no problem with credit in the economy. Will the Chancellor confirm that the latest evidence shows that the flow of lending to businesses has now fallen for the seventh consecutive month, and the money supply is now shrinking at the fastest rate since records began?
	The Chancellor again tells us of his changes to the banking system. He promises yet another banking Act, but the verdict of the Governor of the Bank of England is simple: there has been "little real reform" under this Government. Meanwhile, credit and confidence remain in desperately short supply, and still the Chancellor and Prime Minister have no plans to provide either. Indeed, as Treasury questions have just demonstrated, they do not have the simple answer to the simple question of why Britain is still in recession while the rest of the world is in recovery.
	That is the truth about this Government. They went around boasting that they had saved the world, but they are still trying to save the British banks, and they have not got on to saving the British economy.

Alistair Darling: The hon. Gentleman raises several points, to which I will reply-but what I find difficult to take is the impression that he gives that somehow he is against these measures, whereas his deputy was on television today saying that he agreed with what we are doing. Indeed, the hon. Member for Fareham (Mr. Hoban) was asked by the BBC interviewer,
	"would you have not done this?"
	and he went on to say:
	"it's worth reminding people, no bank here has collapsed, no individual, no business, had all of their savings wiped out and that is because of what the Government did".
	 [ Interruption. ] No, it was not the hon. Member for Fareham who said that. What he said was, "Absolutely". He agreed with what was being said, and he went on to say that he supported the measures that I am announcing today.  [ Interruption. ] I will answer all the points that the hon. Member for Tatton (Mr. Osborne) made, but the House should be aware that the Conservatives' position at the Dispatch Box is rather different from the position that they take outside the House.
	The hon. Member for Tatton went on about what "everybody's saying in private". I remind him that what everybody is saying in private, and increasingly in public, about him is that he tends to play politics rather too often on issues that are far more important than that.
	The hon. Gentleman asked about the break-up of the banks. To argue that we have been against that recently is nonsense. I said in the Mansion House speech in June that one of the things that we had to do as we stabilised the banking system was to get more competition in the system. The hon. Gentleman also mentioned what I said last year about Lloyds-HBOS. Yes, we did support that merger, because at that stage financial stability was important. I remind him that he agreed with that as well, and he went out of his way to say that he had spoken to the people involved on both sides and assured them of the Conservative party's support. There is not too much between us on that point.
	As for the point about bonuses, it is not true to say that our position is the same as his. I remind him that on Sunday night, when he put out his press release in anticipation of the statement on bonuses, he said that it would apply to British retail banks. By Monday, when the wind started to blow the other way, there was a subtle change and the investment banks were included. It was still only British banks though, while our measures affect all major banks based here. With RBS and Lloyds, we have gone further than any other country in restricting the amount of bonuses that executives can receive, and that goes far further than he or anyone else has suggested.
	The hon. Gentleman asked some specific questions about RBS. Yes, it is a large sum of money-there is no doubt about that-but RBS was one of the largest banks in the world. Indeed, by some measures it was the largest in the world. Unfortunately, however, it got itself into huge difficulties-partly, as I said, because of the acquisition of ABN Amro, and partly because, frankly, parts of its operations had taken on risks that it could not manage, and it did not have enough capital. As he correctly recognised, our choice is whether to support it. If we did not, however, not only would RBS fail, but the knock-on effect would be catastrophic. I appreciate the point about these being large sums of money, but they are unavoidable.
	As for the £25 billion, I went out of my way in my statement to break down how the figures are calculated, so that the House could see what the position is. The hon. Gentleman is right to say that the £8 billion contingent capital is new-that will only happen if the core tier 1 ratio falls below 5 per cent., or there is a severe downturn-but stress tests have been carried out, and the FSA believes that the £25 billion that we have put forward today is sufficient.
	The hon. Gentleman asked about the asset protection scheme rules. He is right to one extent: they were not consistent in January with Commission rules-but that is because there were no rules from the Commission in January, because this is all new territory. The Commission has had to work up rules during the course of this year. While those were being worked up, obviously we found out more about the assets, and the Commission found out more about what is going on in other banks in other parts of Europe-and yes, that has developed.
	The hon. Gentleman asserted that in America there is no public money. Tell that to the US Congress! The then American Administration had no end of difficulty in getting the legislation through, because it involved public money. It is simply not true, therefore, that America is managing to do this without involving the public. That simply is not right at all.
	The hon. Gentleman also asked about lending. It is important to consider closely what is happening in the economy. In September the stock of gross lending to businesses was £492 billion, which compares with a gross stock flow of £478 billion in September two years ago-just before the crisis. So money is being lent. At the same time, however-this is the point that Lord Myners made in the interview on "The World at One"-undoubtedly one thing that happens during recessions is that businesses repay their money as well. At the same time as more lending, therefore, money is also being repaid. That said, everybody agrees that there are still problems with lending and cases of businesses not getting money when they probably should get it, and that there are still problems with pricing. The difference between the Government and the Conservative party is that we propose to do something about it.
	In conclusion, I very much welcome the support of the hon. Member for Fareham for what we are doing, and I hope that at some point during the day he can have a word with the shadow Chancellor. Then perhaps we will see universal support for what we are doing, because I think that that is the right way forward.

Vincent Cable: I thank the Chancellor for giving us good notice of this statement, but may I check the numbers involved? We have the £25.5 billion for RBS, the £3.3 billion after the fee for Lloyds, the £8 billion contingent capital commitment and the £282 billion insurance for the RBS toxic assets. Why did he not also mention that-as I understand to be the case-RBS has been given an additional £10 billion in tax write-offs, which were not previously accounted? Can he explain that?
	On remuneration and bonuses, will the Chancellor explain in simple terms why state-or state-supported-banks are still paying bonuses at all? A bonus is surely a bonus, whether it is paid now or in three years' time. Why do he and the Conservatives think that it is a great discipline and hardship for the bankers to be asked to wait three years for their Ferraris? The Walker report on remuneration says that banks should declare their remuneration packages. Given that the Government have adopted that proposal, will the Chancellor be clear about whether that will be compulsory or voluntary?
	On lending, is it not true to say that if we take into account net lending, which the Chancellor has just mentioned in relation to repayments, the banks are falling well short of their obligations to lend to solvent British companies? Is it not also true that Lloyds has been trying to wriggle out of its lending obligations by opting out of the asset protection scheme? Can the Chancellor therefore clearly explain the nature of the banks' lending obligations? Are they binding and what sanctions are applied if the banks fail to meet them?
	Finally, I want to raise the issue of the breaking up of the banks through the sale required by the European Commission, which I welcome, in order to stop the process by which banks have long been ripping off their customers. Is it not true that the break-up relates purely to 10 per cent. of the banks' assets? The one issue that neither the Commission nor the Chancellor has dealt with, but which the Governor of the Bank of England has raised, is the continued existence alongside each other of retail banks and the large speculative trading operations-the so-called casinos.
	The Government have set their mind against implementing the advice of the Governor and have opted for a more gradual regulatory approach. However, is it not right that private banks that continue to benefit from those guarantees should compensate the taxpayer for the considerable benefit that they thereby derive? We should not today simply be discussing transferring public money from one pocket to another, but discussing how the remaining private sector in the banking system continues to benefit enormously from the guarantees that the Government continue to give it, in the event that it should fail.

Alistair Darling: Let me deal with the hon. Gentleman's questions in turn. First, I explicitly mentioned tax losses in my statement.  [Interruption.] He is kind enough to acknowledge that.
	I take a slightly different view on bonuses from the hon. Gentleman, in that I do not think that they are wrong in themselves. There is everything to be said for rewarding good behaviour or ensuring that the interests of the executives are the same as the public interest, which is what we are trying to do by ensuring that they cannot get bonuses for three years. Also, there is a distinction to be made between, on the one hand, somebody who is paid large sums of money and, on the other, the many bank employees who work in branches or back offices who are not on large salaries, and who in some cases are paid pretty modest incomes.
	That is why we said that people earning less than £39,000 could get bonuses, but individually we are talking about several hundred pounds, or perhaps up to £2,000, which is nothing like the large figures that are commonly thought of as bank bonuses. That is especially important at a time when, as I said in my statement, there are many bank employees who are understandably worried about what is happening, but who never got the great bonuses. I am thinking of the many constituents of mine who were employed by RBS and, in particular, HBOS who were paid in shares that are now worth an awful lot less. We must ensure that we treat people on lower, modest incomes properly.
	On Sir David Walker's recommendations, which we will get at the end of this month, I have said that we will legislate to implement them. We will have to see what he comes up with at the end of the day, but I hope that we can accept his recommendations.
	The hon. Gentleman mentioned lending. He has said again today-and on the "Today" programme at 10 to 9 this morning-that Lloyds has got out of its lending conditions. No, it has not: as I said in my statement, both Lloyds and RBS have to stick with the lending agreements that they have already reached. I do not want to labour the point that I made about lending, because I accept that there are still problems, but it is important to look not just at the net position, but at what is happening in lending and accept that during a recession it is understandable that businesses with big exposure to the banks might want to reduce that.
	On the breaking up of banks, the hon. Gentleman asked the wider question of whether we should divide retail banks and investment banks, which we have discussed before. The best illustration of the difficulties in that is this. For obvious reasons, we had to step in and save Northern Rock, which was a very narrow, conventional retail bank that lost money in pretty conventional ways. However, let us take Lehman Brothers, on the other hand, which was at the more exotic end of the market and had no retail depositors. The then American Government tried out what the hon. Gentleman suggests and let it go down, and look what happened: the entire world's financial system almost followed it down the same hole, which is what led to the action now being taken by Governments.
	That split does not work in practice. However, the legislation that we are going to introduce to require larger banks to make what are colloquially referred to as "living wills", whereby the banks look at their businesses and see how they could separate them out in a crisis, so that regulators and Governments can decide what to do if they got into trouble, is a much more productive way forward.
	I hope that I have answered all the hon. Gentleman's questions, because they are perfectly sensible questions to ask, but I think that we have taken the right decision.

Several hon. Members: rose -

Mr. Speaker: Order. Twenty-three Members are seeking to catch my eye, and we have another statement after this, followed by the Committee stage of an important constitutional Bill, so, as always, I am looking for single, short supplementary questions and for economical replies.

John McFall: Is not the story here that RBS is in a worse state than everyone thought last February, and that the Bank of Scotland aspect of HBOS was a basket case? The message is that capital injection is necessary in order to stabilise the banks and to ensure potential returns for the taxpayer, but the Chancellor will be aware that lending is still a problem. I get hosts of e-mails and messages from people saying that the demand is there, but the banks are holding on to the capital. Does my right hon. Friend agree that the lending agreements should be made transparent, so that we can monitor and track the lending in this country?

Alistair Darling: I agree with my right hon. Friend on that point. It is important that we get to the bottom of all these lending problems, and I am sure that he, like me, will know from constituency cases that it is helpful to understand the difference between what a bank is saying and what a customer is saying. The more openness there is, the better, and I have already referred to the charter that the banks have signed up to.
	My right hon. Friend's general point is also a perfectly good one. For all the bluster on the other side, this is a necessary step. There are huge lessons to be learned, on the part not only of Governments and regulators but of bank boards. The boards really must understand what they are doing, and it is manifestly obvious, certainly in relation to HBOS and RBS, that rather too few questions were asked in those boardrooms.

John Redwood: Why have the authorities lurched from boom regulation, involving too little cash and capital for excessive lending, to bust regulation, which wants too much cash and capital for too little lending?

Alistair Darling: I hope that we can avoid that sort of thing. We have to ensure that there is adequate capital, and it is the FSA that has to assess the adequacy of capital in each case.

John Reid: I think that there will be a broad welcome for the restructuring of the individual deals and of the banks themselves, because this will benefit consumers and taxpayers, but is the question of lending not absolutely crucial? Will my right hon. Friend assure me that, when the banks are restructured, the retail side that is set up anew will have the capacity to lend to small and medium-sized enterprises? If that is not to be the case, what measures will he take-including introducing transparency-to ensure the continuity of lending and open commitment implications that have already been agreed? Perestroika is all very well, but we need a bit of glasnost too.

Alistair Darling: My right hon. Friend is right. It is important that new entrants to the market lend not just to the mortgage market but to the SME sector. That sector is critical to the future of this country: it employs the most people, we are likely to see a lot of growth in that area, and we must ensure that credit is flowing there.

Michael Fallon: Does not the new contingent capital guarantee provided to RBS show that the Governor's concern about the amount of moral hazard remaining in the system is still unanswered?

Alistair Darling: What it shows is that, given the nature of RBS and the fact that it may need more capital, we and the FSA believe that the £25.5 billion-worth of capital that we are putting in is the right thing to do. On the more general point, we are trying to get a safer, more stable banking system, because that is the only way in the long run to get back to a situation in which people realise that there is inevitably a degree of hazard in the industry. What we want to avoid is taxpayers being stuck with the downside when things go wrong.

Geoffrey Robinson: Will the Chancellor confirm, on the question of lending, that the banks' commitments are in respect of net lending only? Will he also confirm that a condition of the bankers' bonuses is that they will be tied to their banks achieving those levels of lending?

Alistair Darling: I think that we need to develop this further. In my statement, I said that the lending commitments will continue. Net lending is a measure of how much additional lending is going on, but it does not give us the whole picture, particularly during a recession when firms that can afford to do so are inevitably paying down their money. The key point will be when the economy begins to recover. When firms start to grow, and to go to the banks for money, we must ensure that there is credit for creditworthy customers.

Peter Tapsell: Why cannot the Chancellor see the looming spectre of mass unemployment in the next banking crisis, which will be even greater than that of 2008 unless he moves to prohibit the commercial banks from indulging in investment banking? His repeated references to Lehman and Northern Rock are completely irrelevant, as various commentators have pointed out.

Alistair Darling: Actually, I thought that quite a few commentators had pointed out that the comparison was relevant; as the hon. Gentleman knows, there has been quite a lot of debate about this over the past three or four weeks. On unemployment-I think that the hon. Gentleman, given his Keynesian background, would support me on this-I believe that it is up to the Government to do everything they can to try to get people back into work as soon as they lose their jobs. That is particularly relevant to quite a lot of the banking redundancies that have been announced in the past 24 hours.
	Our objective must be to try to prevent such a crisis in the banking system from arising again, and I do not think that the split that the hon. Gentleman and the hon. Member for Twickenham (Dr. Cable) referred to would avoid the problem. When confronted with a Lehman or an AIG-the insurance company in America-I cannot see how a Government could simply walk away from the consequences of such a situation.

Mark Todd: We can assess the value of the asset protection scheme as applied to RBS only if we know a little more about the due diligence that has been conducted and the sensitivities that have been applied to that exercise. Will that be published together with the other details of the scheme when it is made available to the House?

Alistair Darling: The due diligence was conducted by the regulator-the FSA-and we will publish the details once they are finalised. As the House will know, we have set up an agency to run the asset protection scheme, which will of course be subject to audit by the National Audit Office.

Stewart Hosie: The original decision to merge the banks certainly reduced competition on the high street; I hope that today's announcement on the disposal of parts of the banks' retail networks will help return competition to the high street. However, the statement also referred to the disposal, for example, of Intelligent Finance from Lloyds and of the insurance division of RBS, which are both important employers in Scotland. May I ask the Chancellor to confirm that no disposal or sell-off of those divisions or business arms will take place without the strongest possible guarantees about employment and decision making in Scotland?

Alistair Darling: I agree with the hon. Gentleman that employment and jobs are very important. As he rightly says, there are many employees working for parts of the Lloyds Banking Group and RBS in Scotland, as I know very well. It is important to do everything that we can to protect jobs. It is worth bearing in mind that, had we done nothing 12 months ago, those two banks would have gone absolutely and there would have been huge job losses as a consequence.
	When it comes to disposals, I hope that we will do everything that we can to ensure that employment is maintained in Scotland-and, indeed, in other parts of the country. The hon. Gentleman will be aware that RBS has, from time to time, said that it wanted to sell Direct Line and Churchill in particular, but for various reasons it did not do so. Inevitably, there will be restructuring from time to time, but the jobs issue is very important.

Jim Cousins: The Chancellor is asking the British taxpayer to guarantee £280 billion-worth of RBS loans. How much of that is outside Britain?

Alistair Darling: When the details are finalised, I intend to publish-I will lay a copy in the Library-the breakdown of where the loans are. My hon. Friend will then be able to see for himself. Let me make this general point. Understandably, hon. Members will be concerned about loans that are outside this country. The difficulty we have is that, as I said, RBS is one of the largest banks in the world and a lot of what it did was overseas. Unfortunately, when it comes to the stability of the bank and therefore of the rest of the system, it is not possible to make the intellectual distinction between what is here and what might be overseas. I confirm to my hon. Friend that I will publish those details.

Douglas Hogg: The Chancellor has made it plain in respect of the restructuring of Lloyds and RBS that bids will be confined to the smaller competitor or new entrants to the market. Does not that mean that a lower price will be obtained than would have been the case if the ability to bid were more widespread, so this approach will involve a loss to existing shareholders and, surely, to the taxpayer?

Alistair Darling: As I have said before, it is important that we get money back for the taxpayers. However, if all the parts of the banks that were divested by RBS and Lloyds were swallowed up by Barclays or Santander or HSBC, we should end up with only half a dozen people in the business of lending. That is not enough. We already have too few loan providers in this country. Of course, potentially, we have the building societies and some of the smaller banks, but at present, for obvious reasons, they are fairly quiet on the lending front.
	Simply letting the bits be swapped from one bank to another would be wrong. Besides-this is relevant to what was said by the hon. Member for Dundee, East (Stewart Hosie)-questions would be raised over employment. I think that we are pursuing the right course, because it must be right for us to get new entrants into the market: that must be good for the whole economy.

Michael Meacher: Given that this latest danegeld to the banks will cost an extra £40 billion-in addition to the £50 billion already spent on bailing them out-why is my right hon. Friend so enamoured of this busted, out-of-control, casino-market model of banking which costs the taxpayer such gargantuan sums? Why does he not instead remutualise the three spin-offs, especially Northern Rock? That would be infinitely less costly for the taxpayer and infinitely more secure for the depositor.

Alistair Darling: I am not sure whether my right hon. Friend was in the House during Question Time, when I was asked about Northern Rock on two occasions. Let me briefly repeat what I said then. I should be very happy to see a mutual option, but whoever came in would have to come in with sufficient capital to ensure that that was possible, because Northern Rock still owes quite a lot of money to the taxpayer.
	As for my right hon. Friend's point about banking generally, he and I may disagree on this-as we have from time to time-but I think that a properly functioning commercial banking system is quite a good thing. What I want to do, though, is ensure that it is properly supervised, regulated and capitalised, and operating in a way that suits the interests of people in this country.

Robert Wilson: Does the Chancellor wish to pass on the Prime Minister's personal apology to taxpayers for arranging the shotgun wedding between Lloyds and HBOS?

Alistair Darling: If I were the hon. Gentleman, I should be very careful before saying such a thing. He may wish to have a word with the hon. Member for Tatton (Mr. Osborne), the shadow Chancellor, who made a point of telling the country that on the day in question he spoke to those involved on both sides, and said that the Conservatives fully supported that particular merger.

Malcolm Wicks: Given the proud and honest record of the mutual building societies, in contrast to what has happened in the commercial sector, why are the Government not more enthusiastic about options to enable and facilitate the remutualisation of parts of the banking sector, perhaps starting with the decent part of Northern Rock?

Alistair Darling: As I said to my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher), I would certainly not be opposed to a proposal in relation to mutuality if one came along, but it would have to come with sufficient funds. The other point is that, as my right hon. Friend will recall, while it is true that most of the trouble has been visited on the non-mutual sector, one or two mutuals did get into trouble. A lot of that has to do with the management rather than the structure. I am not against mutuality-far from it. I should like to see more of it, but it does need to be funded.

Julian Brazier: Does not yet another expensive restructuring announcement highlight the weaknesses in the tripartite system for supervising banking and, indeed, monetary policy?

Alistair Darling: No, it does not. I think that the hon. Gentleman is rather missing the point. The reason RBS got into trouble was that the regulatory system needed to be tougher. It is clear that its then board did not know what it was doing.

Chris McCafferty: Does my right hon. Friend agree that today's statement from Lloyds represents significant progress towards its operation as a fully commercial enterprise? Does he agree that the payment of a £2.5 billion fee to the Treasury for trading benefits of the asset protection scheme last year represents a good deal for the taxpayer?

Alistair Darling: It represents the start of the process of ensuring that we get money back for everything that we have done. That is one of the objectives that I believe to be very important.

John Greenway: Does the Chancellor agree that many home owners have no choice about their mortgage providers because they have no equity, and therefore cannot switch to a more competitive marketplace? Will he ensure that if institutions such as Cheltenham & Gloucester and, perhaps, TSB in Scotland are sold to other lenders, their standard variable rates will not increase, given that there is every prospect of their being bought by an institution with a higher SVR?

Alistair Darling: It is important that when the disposals take place and new companies come in, there is as much communication as possible with people who have mortgages, so that they can see what the position is and what choices are available to them. For example, I know that Northern Rock is about to write to all its savers and mortgage holders explaining what is happening and people's options. To some extent it is inevitable in any competitive market that different providers offer different rates. As we go through this process, people need to be told that they have a choice. Equally, if somebody does not want to go to a new bank, they always have the option of staying with the bank they came from. As much as is possible, people must be able to make those choices.

Tony Lloyd: The country will be grateful that we have a Chancellor who puts the national interest ahead of tomorrow's press release. Companies involved in high science and high technology are finding it difficult to obtain money from the current banking system. Will the Chancellor look into whether we need either banks devoted to that or special instruments within the banking system to guarantee access to finance?

Alistair Darling: My hon. Friend is absolutely right about a lot of high-tech investment and the need to encourage it. That is one of the reasons why I announced measures in the Budget and the Prime Minister has announced measures through the innovation investment fund to try to help to fill the gap where the commercial banks are not operating. It is very important that we support that. Regardless of whether it is done through the commercial banks or through Government help, I want to keep the issue at the forefront of what we are doing because our future depends on it.

Philip Davies: The Chancellor did not mention Bradford & Bingley, which might indicate his lack of interest in it, but he did mention Northern Rock and measures to keep it lending and to facilitate its return to the private sector. Will he explain the following to people in my part of the world? Whereas Northern Rock was a basket-case organisation that had been taking emergency funding for months and months and is still a going concern, Bradford & Bingley, which he must admit was not in any way in as bad a shape as Northern Rock at the time, was dismantled and is being wound down.

Alistair Darling: The hon. Gentleman is not quite right about that. If Bradford & Bingley had been doing all right, it would not have reached the situation where its directors believed that it was no longer a going concern. The Financial Services Authority had to step in because Bradford & Bingley got into difficulties; I am afraid that that fact is incontrovertible. We took prompt action to ensure that the part of the bank that was viable-the front end of it-was transferred to Santander. The rest of it and the management of the mortgages is something that we will have to handle in the longer term. How the hon. Gentleman can claim that there was no need for the bank to have any assistance whatever is very difficult to fathom.

Gordon Prentice: With the sale of 900 bank branches, might we see the Bank of China on our high streets?

Alistair Darling: At this stage, I do not know who is likely to be bidding for these banks, but, obviously, we will need to make sure that whatever safeguards we think are appropriate are in place. I make the general point, however, that the British financial sector is what it is largely because it is pretty international and, provided we have the right regulation and supervision, that will be good for us in the long run.

Brooks Newmark: The Chancellor said in his statement that before we could reach a binding agreement with RBS we needed to carry out due diligence on the assets. What was the level of write-down after, as opposed to before, in respect of RBS's balance sheet on those assets?

Alistair Darling: I said that we and the FSA had to carry out due diligence; the FSA has carried out that due diligence. As to write-downs, they will appear in the bank's accounts.

Rob Marris: Canada has some of the biggest banks in the world, Canadian banks undertake both investment and retail banking, and the most robust banking system among the G20 countries during the world recession has been Canada's. What lessons does the Chancellor draw from that?

Alistair Darling: There are a number of points that could be made in relation to the Canadian economy, but on its banking system I repeat the point that I do not think it is possible to make the neat distinction between a simple bank and a complex bank and to assume that one will get into trouble and the other will not. That is why I take the view that we have to approach these things as they are, rather than as we might wish them to be.

Mark Lazarowicz: There certainly will be concerns in Edinburgh about what this means for jobs in my constituency and other constituencies in the city, and I welcome the assurances that my right hon. Friend has given in that respect. What opportunities are there to build on what is happening, and to strengthen and bring innovation to the financial sector in Edinburgh-for example, through the suggested re-establishment of a Scottish-based bank-as part of the restructuring of the banking system resulting from these announcements?

Alistair Darling: My hon. Friend is right: both of us represent a city that is home to very large financial institutions, many of which in the non-banking sector are doing very well; that is an important part of the Edinburgh economy. Both of us are focused on the fact that, whatever happens, jobs are very important, because for the most part these are good-quality jobs that provide good employment. As we restructure the banking system-as we make it safer and better for people-jobs must be at the front of our minds, because that is very important for Edinburgh's prosperity.

Higher Education

David Lammy: With permission, Mr. Speaker, I should like to repeat a statement made by my right hon. and noble Friend the Secretary of State for Business, Innovation and Skills about "Higher Ambitions: the future of universities in a knowledge economy", which we are publishing today and placing in the House Libraries.
	The last 10 years have been a decade of outstanding achievement for higher education in this country. Talented people and enterprising institutions, backed by public investment and reform, have delivered the twin objectives of widening access and creating excellence. When the Government reformed the universities' fees, we were told that students, especially poorer students, would be put off applying. The exact opposite has occurred. A record number of students now attend university, and the gap between socio-economic groups has narrowed, not widened. For the first time, 1 million students will start their studies this year, and the quality of student academic achievement is high. Drop-out rates have fallen by a fifth, and the number of firsts has doubled. This demonstrates that wider opportunity is not the enemy of excellence, as opponents of change have alleged.
	We have a disproportionate share of the world's leading research universities. With just 1 per cent. of the world's population, we achieved 12 per cent. of the world's scientific citations. Institutions across the sector have contributed to this success-the newer universities, alongside the older ones. Public funding for both research and teaching has increased by more than 50 per cent. in real terms since 1997.
	Universities have also developed new sources of income, and tuition fees are bringing £1.3 billion a year to boost the quality of a student's education. We should thank universities and their teaching staff, administrators and students for their outstanding record of achievement over this last period.
	The strategy we are publishing today aims to set a course for an equally successful decade ahead, but new times and new conditions require some fresh policy choices and judgments. The coming decade will see public expenditure inevitably more constrained. Attracting the best students and researchers will become more competitive. Above all, it will be a decade when our top priority is to restore economic growth, and our universities need to make an even stronger contribution to this goal.
	Able people and bright ideas are the foundation stones of a thriving knowledge economy. Producing both is what universities are all about, so in the next 10 years we will want more, not fewer, people in higher education, and more, not less, quality research.
	Our first objective, therefore, is to ensure that all who have the ability to benefit can access higher education; there should be no artificial caps on talent. Our goal remains for at least 50 per cent. of 18 to 30-year-olds to enter university. We have made great progress in the number of people beginning a three-year degree at 18 or 19, but the challenge for the next decade is to offer a wider range of study opportunities-part-time study, work-based study, foundation degrees and study while at home-to a greater range of people. So we will encourage the expansion of routes from apprenticeships and vocational qualifications to higher education, and offer more higher education in further education colleges.
	Inadequate information, advice and guidance at school still bars too many young people from fulfilling their potential. We will work with the Department for Children, Schools and Families to rectify that. To meet the social mobility goals in Alan Milburn's report, all young people must be encouraged to strive for challenging goals by teachers with ambitious expectations for them. Universities should also do more to reach out to young people with high potential. I want to make it clear that this Government will not dictate universities' admissions procedures, nor undermine excellence. All students must continue to enter higher education on merit, but I believe that merit means taking account of academic attainment, aptitude and potential. Many universities are already developing their use of contextual data, and we hope that all universities will consider incorporating contextual data into their admissions processes to assess better the aptitude and potential of those from less-privileged backgrounds. We are also asking Sir Martin Harris, who heads the Office for Fair Access, to consult vice-chancellors on improving access to the most selective universities, and he will report back in the spring.
	The Government's second objective is for universities to make a bigger contribution to economic recovery and future growth. Knowledge-generation and stewardship in all subjects has public value and is important in its own right. It is vital, in particular, to creating wealth, through the commercial application of knowledge and preparing our people for employment. We have, therefore, decided to give greater priority than now to programmes that meet the need for high-level skills, especially in the key areas of science, technology, engineering and maths. New contestable funding will provide universities with the incentive to fulfil that priority. Areas where the supply of graduates is not meeting demand for key skills will be identified, and we will seek to rebalance this by asking the Higher Education Funding Council to prioritise courses that match the skills needs. We will look to business to be more active partners with our universities. Employers should fully engage in the funding and design of university programmes, in the sponsoring of students and in offering work placements. We believe that that is possible without compromising the universities' autonomy and educational mission.
	Our third objective is to strengthen the research capacity of our universities and its commercialisation. The investment of the past decade has greatly strengthened the public science base, and we will continue to protect its excellence. That will require a greater concentration of world-class research, especially in the high-cost scientific disciplines. Research excellence is, of course, spread across a wide number of institutions and subjects. The challenge now is to develop new models of collaboration between universities and research institutions, so that the best researchers, wherever they are located, co-operate, rather than compete for available funds.
	The Government's fourth objective is to promote quality teaching. The quality of education provided by our universities is generally good, but it needs to be higher. I welcome the action that universities are taking to raise standards in teaching and to strengthen the external examiner system. Students deserve nothing less. They will rightly expect to be better informed about how they will be taught and about their career prospects. We want the Quality Assurance Agency for Higher Education to provide more and clearer information to students about standards in our universities. Students' expectations and actual experience should be central to the quality assurance process.
	Our fifth objective is to strengthen the role of universities in their communities and regions as well as in the wider world. Universities provide employment, enhance cultural life and offer many amenities to their surrounding communities. They shape and communicate our shared values, including tolerance, freedom of expression and civic engagement. We will support universities in safeguarding these values.
	We will ask universities to continue to develop their role in local economic development with the regional development agencies and with business. The Government will also do more to champion the international standing of our universities as world leaders in the growing market for higher education across borders and continents, including by e-learning.
	In the decade ahead, we will expect more from our universities than ever before. They will need to use their resources more effectively, reach out to a wider range of potential students and devise new income sources while maintaining excellence. As we look to our universities to do more, we will also need to look afresh at securing the funding that excellence requires and at how all who benefit from higher education-taxpayers, students and the private sector-should contribute.
	It was agreed in 2004 that the new fees structure in England should be reviewed at this stage, and the Government will make an announcement about that shortly, but I should stress that we will seek a properly and fairly balanced approach without placing an unreasonable or counter-productive burden on any single source of funding.
	At the heart of the framework published today is a strong and creative vision of higher education, with strong, autonomous institutions with diverse missions and a common commitment to excellence, a shared framework for extending opportunity to all who can benefit, and our universities as a cornerstone of our country's cultural and social vitality and a centre of our future economic prosperity. I commend the statement to the House.

David Willetts: We welcome the publication of the document and I am grateful to the Minister for giving me advance sight of it. It has, of course, been a long time coming. The whole exercise began in February 2008, so its gestation period matches that of a slightly premature elephant, I gather. Meanwhile, not only has the Secretary of State who launched the exercise moved on but the whole Department from which it was supposed to originate has been abolished. We are rather relieved to see the document at all.
	We should thank the experts from the world of higher education who have contributed their reports to this exercise. I very much agree with what the Minister said about the strength of our universities, in which we can all take great pride. The next step, of course, is the funding review. Will the Minister confirm that all parts of the higher education sector, including students, will have an opportunity for their voices to be heard in that exercise? Will he confirm that the funding review need not be limited to the framework set out in the document published today?
	The Conservatives particularly welcome what the framework document says about the importance of teaching and of information for students and prospective students. Students are not just consumers, but when they are paying so much for their university education, we can well understand that they become consumerist and want information about what they will get in return for the fees that they pay.
	We, of course, have been working with Microsoft on a pro bono basis to ensure that such information is easily accessible for prospective students. Indeed, I called for it to be available almost two years ago now. We are relieved that Ministers in the Department have caught up with this agenda, which is extremely important. But why is the QAA to be put in charge of releasing the information? Students' demand for more information may not be best met by that quango. Surely we need to use far more imaginative ways to make the information available to students and prospective students-such as via websites and social networking sites, or third sector and other organisations. I very much hope that the information will be available in a wide and accessible way.
	There also need to be strong incentives for good teaching, to match those that already exist for research. I want to ask the Minister about research and the STEM subjects. Of course, STEM subjects make a very important contribution to the growth of our economy, but it was disappointing that, in the context of research, the Minister referred in his statement to those subjects only. Is he not aware of the dynamism of our creative industries, and of the crucial role also played by the arts and humanities? Does he recognise that a dynamic and well-balanced economy needs to draw on the dynamism and research capacity of university departments in the arts and humanities as well as those in STEM subjects?
	A key theme in the statement was broadening access to university. We recognise the importance of that agenda, to which the Minister said reference was made in the excellent report from Alan Milburn, whom we think of as the right hon. Member for Darlington. However, I think that the Minister has ignored some of the very sensible ideas in that excellent report, and embraced some rather risky ones.
	The report calls for a proper independent careers service to take the place of Connexions. The Conservatives strongly support that proposal, which we have advocated as well. The Minister came to the House to talk about open access to university and social mobility, so it is a great disappointment to find that his Department and the DCSF have failed to embrace the proposal for an independent careers service. Many people believe that it would improve access to information, and hence access to university, for people from a wider range of backgrounds.
	Meanwhile, the Minister flirts with contextual data for university admissions. I warn him to be very careful in this territory. There are, of course, excellent initiatives, such as the one that links King's college London with Guy's and St. Thomas's hospitals. It takes students from poorer backgrounds who have less good A-level results and gives them a high-quality medical education. Does the Minister agree that that excellent initiative should be repeated?
	Students and their parents will lose confidence in the integrity of the university admissions system if it is used for crude class warfare. We need to hear from the Minister how he believes that this contextual information will be used. Today, it is students from households on modest incomes who are suffering the most from problems such as those afflicting the Student Loans Company. The Minister tells the House about broadening access to university, but does he not recognise that it is students from the poorest backgrounds who are most desperate when they cannot get their maintenance grant or loan? Disabled students are having particular difficulty accessing their grants at the moment. Will the Minister take this opportunity to give us an update on that situation?
	The Minister talks about progression from FE to HE, which is also very important for broadening access. However, will he confirm that, under this Government, the proportion of FE students progressing to HE has fallen from 9 to 7 per cent?
	Conservative Members therefore believe in the importance of the debate that the framework document has launched and we will contribute to it positively. It is a pity, however, that in launching this useful document, the Minister has had to lard his statement with quite so much self-congratulation when the very problems that are rightly identified in the framework document and that need to be tackled are ones that have been developing in the past 10 years of this Labour Government.

David Lammy: I am grateful that the hon. Gentleman broadly welcomes what we have said today. I did not seek to lard the Government for all that has been achieved. In fact, I congratulated the sector and students on much that has been achieved, but it is important at this critical stage to contrast the past 10 years with a previous period in which the unit of resource was cut- [Interruption.] Lecturers were paid less, students put up with poor facilities, and our research fell behind international standards. This is an important juncture at which we seek to- [Interruption.]

Mr. Deputy Speaker: Order. The hon. Member for Reading, East (Mr. Wilson) should not maintain a sedentary conversation when the Minister is speaking.

David Lammy: It is important to contrast that period with the present, as we look forward.
	On the funding review, we always said that we would hold that when the first cohort of students come to the end of their studies. They did that this summer, so we will set up the review, as the hon. Member for Havant (Mr. Willetts) knows, because we have had conversations with him on Privy Council terms. I will make the announcement shortly.
	The student dimension is central to that review. I would expect the review to take into account a range of student opinion. We also said that the review should look back at how the system has worked over the past few years, but it should also look forward. In looking forward, it must assist us as a nation better to support mature students and part-time students in particular, as we look at the student support mechanisms.
	The hon. Gentleman is disparaging-I am surprised to see how disparaging he is-of the appropriate quality and inspection regime that exists for universities. I do not know whether that is indicative of a Conservative proposal for an Ofsted arrangement for our universities, but the Government have always sought to maintain the autonomy of the university sector while ensuring that we are not complacent about standards and quality.
	That is why we think better student information is so important going forward. Students need to know what the employment prospects are when they embark on a course. They need to know the degree of independent learning, contact hours, the style of teaching and other important information. That is the direction of travel. At the same time, it is important that we are more public-facing in the national conversation that we are having about quality in the system.
	It is a false debate for the hon. Gentleman to come to the Dispatch Box and try to draw an either/or about science, technology, engineering and mathematics as against art and humanities. It is not an either/or; it is an "and" and "both", but in underlining science, technology, engineering and mathematics, we recognise where we have come from. When we came to power, there was a campaign called Save British Science because things had got so awful for scientists and students in the sector. We cannot have that if we are to come out of a downturn.
	We recognise that those subjects cost more. They are more expensive as a cohort of subjects than traditional arts and humanities. Of course we support the digital economy, low carbon and all the other areas that depend on the STEM subjects, but we are saying what industry and the CBI have said to us-that this area is critical going forward. It is critical to international collaboration. It requires more funds. We must support it, and we are making funding contestable to ensure that those universities that can add and do more are able to do so. We will be publishing our response to Alan Milburn's report- [ Interruption. ] The right hon. Member for Darlington (Mr. Milburn)- [ Interruption. ] Absolutely; I mean my right hon. Friend, and I was very pleased to speak to the Darlington constituency Labour party just a few months ago.
	We will also be ensuring that our information, advice and guidance improve. That means a stronger role for Ofsted; the new statutory guidance that has been issued; working, in some schools, on teacher attitudes; identifying students more appropriately; and universities, particularly the more selective institutions, reaching deeper into schools, which is why we have asked Sir Martin Harris to do the work that he has done.
	The hon. Gentleman has tried over the past few weeks to have his cake and eat it. He is part of a review; one week he speaks to one audience by indicating fee levels of £7,000, which we have not forgotten; the next week he attempts to speak to students by underlining their importance in the system; and today he plays to the audience-we know which papers he is trying to reach into-with his class warfare caricature contextual data. University and attending university, as he knows and agrees, is about attainment, aptitude and potential. That is why we have a UCAS form-so students can indicate that aptitude and potential.
	However, we know that, for students from poorer backgrounds, sometimes that potential is thwarted; and I stand by those young people in constituencies such as mine, living on a housing estate and sharing a bedroom with four or five brothers or sisters, because if they achieve an A and two Bs, that achievement needs to be recognised. I welcome what universities are doing in that regard. The hon. Gentleman commends the programme at St. George's medical school, and that is precisely what we are seeking to underline and support throughout our sector.
	I am very pleased that 13 of the most selective universities have come together to work out how they can support each other on contextual data. The Government have sought to support them, but we are not responsible for admissions.

Mr. Deputy Speaker: Order. I am sorry to interrupt the right hon. Gentleman a second time, but this time my concerns are in his direction. He has now taken longer to reply to the questions than it took to put them to him. Bearing in mind the strictures of Mr. Speaker about the business that we have today, I hope that the right hon. Gentleman has concluded his reply to the hon. Member for Havant (Mr. Willetts), and that we can inject some extra urgency into the rest of the proceedings.

David Lammy: Mr. Deputy Speaker, forgive me. Contextual data always gets me going- [ Interruption. ] The hon. Member for Bexleyheath and Crayford (Mr. Evennett) says, "On the careers service." We will respond to my right hon. Friend's report in due course.

David Blunkett: I welcome the framework, but may I suggest to my right hon. Friend that in the forthcoming review, it will always be better to have people-students and providers-inside the tent than commenting from outside? In the lead-up to the review, will he, along with his right hon. and noble Friend Lord Mandelson, reconsider the notion of penalising universities that decide, at their own expense and off their own bat, to take additional students who would otherwise be excluded and, therefore, unable to take up the opportunity of social mobility, to which all of us have been paying lip service?

David Lammy: I recognise what my right hon. Friend says, with his wealth of experience in these areas. He might be aware that David Melville is looking particularly at the situation that arose at London Metropolitan university, where this has been a broader issue that may have bigger implications for the sector. My right hon. Friend is right to raise the matter, and we are looking into it.

Lorely Burt: I, too, thank the Minister for prior sight of the statement.
	It looks to me as though the educational cat has escaped the bag. In almost the last paragraph of the statement, the groundwork for raising university tuition fees seems to have been laid. I was shocked this morning when the Secretary of State attempted to defend this Government's introduction of tuition fees as a "bold and successful" move. In what way is saddling graduates with nearly £10,000-worth of tuition fees bold and successful? Of course students have the right to have high expectations, but that must not be used as an excuse to raise fees. The Secretary of State talked about students being more demanding, and rightly so, but why is the Minister apparently blocking the National Union of Students from being represented on the funding review panel? Perhaps he could comment on that.
	Worst of all is the confirmation that the funding review will not report until after the election. Such collusion between the official Opposition and the Government will only fuel suspicion that the two parties are set to raise fees, doing nothing for widening participation and driving up social mobility in this country. The Minister talked about widening participation and universities being engines of social mobility, which is welcome. However, it should be remembered that his Government's record on widening participation is woeful, with only a third of first-time entrants to higher education coming from lower socio-economic backgrounds. The use of contextual data in the selection process will be a step in the right direction, but any plans to raise fees will have a huge impact on whether many young people even consider applying to university in the first place.
	On strategic subjects, I welcome any effort to fit this country with the skills that we need to fulfil our economic potential. However, modern languages is experiencing funding cuts. It is important as a strategic subject in its own right, and it is currently in crisis in our schools. Will the Government consider making modern languages a strategic subject when it comes to funding allocation?
	Obviously universities have a very important role to play in working with business and aiding our economic recovery, but it should also be borne in mind, as the hon. Member for Havant (Mr. Willetts) mentioned, that higher education gives students important skills and this country long-term benefits, no matter what subjects they are studying.
	More transparency, choice and information is of course welcome, but I feel slightly uneasy about introducing the language of the consumer, particularly if it comes with a big price tag and students end up with a mountain of debt.

David Lammy: On the hon. Lady's serious point, she will be aware of the Worton review on languages. I welcome that review. Professor Worton has recommended a new forum, which I am happy to chair, to try to ensure that university languages departments diversify and extend beyond traditional European languages, particularly in developing Chinese and some of the Asian languages over the next while. I welcome that and we will continue to consider the issue.
	On the political points that the hon. Lady raises, the Liberal Democrats' position is constantly changing. I ask her to recognise that the leader of her party has changed their position and is flip-flopping between whether they are for tuition fees or against them, and I note the partisan nature of how they are seeking to do this. The point is this: the Lib Dems can abolish tuition fees only if they are content to cut numbers; they cannot have both. They cannot challenge us on widening participation and then stand by their position on tuition fees.

Barry Sheerman: Does my right hon. Friend agree that if he had been one of my students and presented this statement as an essay many years ago, when I was a university lecturer, I would have said that it was a bit vague in terms of what it is trying to deliver? If this is the future of universities-there is some very good stuff here-can we be sure that the Government, if re-elected, will, year on year, increase the amount of money invested in this absolutely vital resource of our economy?

David Lammy: I know that my hon. Friend is a quick reader, but I cannot believe that he has managed to consume the entire report quite so quickly. I promise him that there is meaty detail in the document. He is a valiant campaigner for funding for higher education, and I hope that he knows that the Government recognise that it is a key component of our economy and needs to continue to be properly resourced.

Peter Luff: There is a great deal to welcome in the statement and also some things on which we need to encourage the Government to do further. I am particularly pleased to read in the report about the inadequate information, advice and guidance at school to which the Minister referred. The Government's recent response to the report of the then Select Committee on Innovation, Universities, Science and Skills on the subject was somewhat disparaging and dismissive of the concerns expressed. They have an opportunity to redeem themselves in a few weeks when they respond to the report of my Committee, the Select Committee on Business, Innovation and Skills, which made exactly the same point. I hope that they will flesh out the Minister's point when they do so, because it is extremely important.

David Lammy: May I commend to the hon. Gentleman the relevant work that was published last week by the Department for Children, Schools and Families? It is an excellent contribution to ensuring that schools are equipped to be better in terms of the information, advice and guidance they offer over the next decade. There will be a role for Ofsted, an identifiable person in a school who is responsible for careers and new guidance for schools to follow, as well as the work that I have outlined today, which Martin Harris has set up. I hope that we will continue to reach further in considering how schools can better support students to make choices in higher education.

James Plaskitt: I welcome my right hon. Friend's statement and particularly the progress that we have been able to make as a result of the 2003-04 changes in respect of widening access. In the forthcoming review of fees, will there be a presumption against a completely unrestricted fees market, which would make it impossible to maintain that progress on widening access?

David Lammy: My hon. Friend puts his point well. He will recognise that there are a range of views about how best to get funding into the system. He mentions one way, but the Government set their face against it when they capped fees at the £3,000 mark back in 2003-04.

Robert Wilson: The Government have correctly identified that the expansion of the higher education sector in recent years has partly been driven by foundation degrees, but the really successful model lies in the US with community colleges. Is the Minister aware that community college students are generally funded under a tripartite system, with a third of the costs coming from business, a third from the state and a third from the individual? Is that financial model under active consideration by him and his Department?

David Lammy: The hon. Gentleman is right that there is much to commend in the college system in the United States, but there is also much to commend in the role of both further education in this country and the post-1992 universities, which have been right at the centre of extending participation and account predominantly for the 54 per cent. of students in our system who are mature students, which is more than there are 18-year-old undergraduates. Yes, we can commend the States and look harder at the system there, but let us recognise that we have some real gems in our own country.

Stephen Ladyman: I welcome the statement, particularly the part that is likely to lead to more science and engineering graduates in the long term. Does my right hon. Friend agree that sometimes the problem is not the lack of available places and courses for science and engineering so much as the lack of available students who want to study those subjects? What more can we do to encourage more young people to take an interest in those subjects and become science and engineering graduates?

David Lammy: My hon. Friend is right, and we continue to work with colleagues in the DCSF and with Aimhigher associates, who are young people themselves and are returning into schools and inspiring a new generation of students. We work also with the professional bodies such as the Engineering Council, which has a range of schemes-I can think of a particular one in south London-and will hopefully produce a new generation of ethnic minority students who would previously not have considered science as being for them. We are also ensuring that business is better connected to schools, through our academies and a range of programmes such as our diplomas. That will inspire a generation of young people with the throughput and desire to progress in science, technology, engineering and mathematics.

Alistair Burt: But to follow the point made by the hon. Member for South Thanet (Dr. Ladyman), is the Minister not more concerned about the lack of connection between universities and schools in relation to science? That lack of connection means that a number of science faculties now have to run remedial courses for their undergraduates, and that an increasing number of good-quality science courses are filled by an over-proportion of overseas students, because the offering being made by schools in terms of science undergraduates is not meeting the needs and requirements of universities. Does he not have to do more to close that gap between schools and universities to ensure that we get the science graduates we need?

David Lammy: I do not recognise that caricature, because if the hon. Gentleman looks at the recent results at A-level science and at the cohort of young people doing science, he will see that both are up, never mind the number who take up postgraduate study, which has doubled since the previous Administration. Of course there is more we can do, particularly in relation to triple science, and the DCSF is doing that, but I do not recognise the caricature that he has presented.

Laura Moffatt: It is good to hear my right hon. Friend reiterate this Government's commitment to increasing participation. Does he agree that it is vital that we press ahead with the innovative schemes of university centres in new places, such as the one in Crawley, which was one of the last six selected? It is a fantastic innovation, under the leadership of Brighton university, and it is co-located on a further education site to exploit the talent of new people who want to get into a university.

David Lammy: May I congratulate my hon. Friend on her advocacy of a new university centre in her area? At its heart, it is about extending higher education to a cohort of young people and adults who previously would never have gone on to it. That is why we launched the scheme. I commend what has been achieved in her constituency and the wider consortium that has come together. I hope that she will be pleased at the emphasis that the Government have placed on mature students in the framework announced this afternoon.

Adam Afriyie: The Minister has verbally painted a beautiful picture of the future of further and higher education through a wish list of what he wants for the future, but without offering an explanation as to how it might be achieved. I hope that that is in the documents, but he certainly has not explained it today. The only thing that was missing was motherhood and apple pie. My question is this: does he accept that his Government have actually shut down social mobility during their time in office, to the great disadvantage of the least advantaged in society?

David Lammy: I rather like motherhood, and I rather like apple pie, but I must say that the hon. Gentleman knows a lot better in relation to social mobility. He remembers those young people abandoned to the old youth training scheme. He knows that the achievement of young people in the poorest constituencies in the country was dire because of underfunding in FE and schools and poor resources for universities.
	Of course, we continue to stretch for more in terms of social mobility. That is why we asked my right hon. Friend the Member for Darlington (Mr. Milburn) to do his work and why we have set out to do more, but let me tell the hon. Gentleman that in every single constituency in the country, participation has gone up. In the poorest constituencies-the Hackneys, the Tottenhams and the Lambeths, and the inner cities of Manchester, Birmingham and Liverpool-participation has not only gone up since 1997, but the number of students has increased by more than 100 per cent.

Tony Wright: My right hon. Friend mentions the role of the Quality Assurance Agency. Some time ago, I received a communication from it which said:
	"HE serves students best when it progressively and incrementally weans them off direct teaching".
	On this view, presumably the most effective university is the one that teaches least or indeed not at all. If that is the official view, is it surprising that people feel that teaching is losing out to research, that junior staff often feel dumped on by senior staff in teaching terms, and that many students feel that they are not getting the teaching to which they are entitled?

David Lammy: The QAA has sought to underpin one of the key values of higher education, not only in this country but in the world, and that is the principle of independent learning. A sixth former is different from an undergraduate student in the sense that the latter's learning is, yes, about teaching, but it is also about what they engage in independently as they make their path towards research. Across higher education, different mission groups and institutions place different emphasis on that, and I think especially of those institutions that bring the best out of students who might not have recognised that higher education was for them. The journey is about independent learning, and I disagree with the caricature that gives the impression that higher education is the same as school. That is why we reject a national curriculum and the idea that it is about contact with lecturers and academics: it is not.

Paul Truswell: Is my right hon. Friend aware that Leeds university is planning to shed 700 staff? What impact does he fear that that might have on its ability to meet the objectives that he has so lucidly and eloquently outlined in his statement?

David Lammy: I am not aware of the individual circumstances of that institution, but my hon. Friend will recognise that universities are autonomous and it is for university leaderships and their boards to make assessments of the appropriate balance between staff and pupils and the faculty mix at their institutions.

Point of Order

David Heath: On a point of order, Mr. Deputy Speaker. As you know, we have a very busy afternoon. We have just had two statements. In the first, the exchanges between the Front Benchers took more than half an hour. That is perhaps excusable and understandable on a complex area of policy. In the second statement, the exchanges between the Conservative Front-Bench spokesman and the Minister alone took 27 minutes, and I have to say that it was mostly the Minister to whom we were listening, until you helpfully intervened. Is there any way of reminding Ministers that a leisurely approach is not always appreciated when a statement is being made to the House?

Mr. Deputy Speaker: Some spokesmen from the Front Benches have a learned approach to matters, which may take a little longer. The Chair is conscious of time, and Mr. Speaker has underlined to Ministers on numerous occasions that there is an informal tariff-it applies equally to Opposition Front Bench spokesmen. Today, one in three managed to conform. It is important that we ensure the maximum time for Back Benchers, especially on a crowded day like this. I will not take up any more time, therefore, in repeating the obvious.

Onshore Wind Turbines (Proximity of Habitation)

Motion for leave to introduce a Bill (Standing Order No. 23)

Peter Luff: I beg to move,
	That leave be given to bring in a Bill to specify the minimum distances permissible between onshore wind turbines of certain dimensions and the nearest habitation; and for connected purposes.
	When Oscar Wilde wrote that
	"Conversation about the weather is the last refuge of the unimaginative",
	he obviously had not anticipated the controversy that onshore wind farms would generate. Bearing that in mind, I hope that any hon. Member planning to oppose this Bill will listen carefully to what I am about to say, and not base any remarks that they may have planned on false assumptions. In that spirit, at the outset I must make it clear that this is a bipartisan proposal: the sponsors of this Bill therefore reflect the political balance of the House, with more Government than official Opposition supporters. However, it does not, as far as I am aware, represent the official position of any major party-but obviously I hope that that may change.
	Secondly, at this late stage in the Session the Bill has no chance of becoming law. I introduce it simply to stimulate an important debate. Thirdly, the Bill is deliberately modest in scope, and deals simply with the minimum distances that wind turbines should be away from houses. It has a simple purpose. Settling the issue would help local communities, planning authorities and, paradoxically, the wind energy industry itself.
	At the heart of our politics we should place the ethic of reciprocity-the idea that everyone has a right to just treatment, and a responsibility to ensure justice for others. Put more simply, that means "Do as you would be done by". Sometimes, of course, we have to balance the different rights of competing groups. For example, a new high-speed rail line will be fought by communities close to its route, whatever the wider benefits that it brings. It is then that politicians have to choose.
	A visit to the home of two of my constituents in the small settlement of Sheriffs Lench in the vale of Evesham started the process that led me to this Bill. When I saw just how close to their home ScottishPower Renewables plans to put a 125-metre wind turbine, as part of a larger wind farm plan for the area, I realised that I would not like that done to me. The turbines proposed are among the largest ever constructed in England. They will be half as high again as Big Ben and only a little lower than the London Eye-and in the open countryside that is huge. It is roughly equivalent to a 40-storey building.
	In the case of this wind farm, the closest of those massive structures would be only 508 metres from the nearest home, with many more homes about 600 metres from a turbine. That is too close. I ask myself whether the wider social good is served by building such enormous renewable energy sources so close to the homes of hundreds of my constituents, or whether the sacrifice being asked of them, and the damage to be done to a beautiful part of the vale of Evesham, is too great.
	I also noted that the turbines in Worcestershire would not be allowed in a similar location in Germany, or in large areas of Spain and Italy. Denmark is one of the most successful countries in the development of onshore wind power-and I understand that if Danish rules applied, the turbines in my constituency could be built, but many householders would become liable for compensation for loss of property value. England and Wales stand apart from the developing pattern of regulation of onshore wind on mainland Europe. Indeed, in Scotland, too, guidelines specifying what is acceptable are already in place.
	I concluded that the disadvantages of the wind farm proposed for my constituency outweigh the likely benefits. If I felt that way, I had to do something, and the Bill that I am asking leave to present today is that something. My Bill has extraordinary levels of support around the country. Communities from the west country to Cumbria, from Gloucestershire to Derbyshire, from County Durham to East Anglia, and of course from Worcestershire, have bombarded me, and their own MPs, with e-mails.
	I emphasise that the Bill is not a covert attack on any renewable energy technology, nor does it have its roots in any doubts about the causes and consequences of global warming. I am convinced by the consensus that human activity has at least added significantly to the scale of climate change, and has been the major driver of it. In any event, even the most sceptical critic of the climate change consensus would have to admit that the world's fossil fuels are running out, and that they are coming from increasingly unstable areas of the globe.
	In the short run, there is probably enough reliable gas to see us through, if we build enough gas storage in the UK. Investment in new nuclear power can also make a big contribution to keeping the lights on over the slightly longer term. However, diversity is the key to our energy security, and that diverse generating portfolio must include a significant proportion of renewable sources. The UK is extraordinarily well placed to exploit other renewable technologies, as well as wind, such as the power of the oceans-tidal, wave and tidal flow, for example. In my view, we have foolishly underestimated the role that solar-thermal technology can play in providing hot water in homes, and we are late in introducing smart meters to reduce demand.
	We must now invest in every available renewable technology and see which will work best for us in the future. That includes onshore wind turbines, but only in the right places. If other technologies can help us to meet our challenging renewable energy targets, and if wind power itself is still the subject of innovation-with smaller, more powerful, less visually intrusive turbines in development-it is right that we take, in the short term at least, a precautionary approach to the siting of onshore wind turbines very close to homes in England and Wales.
	There are different concerns about wind farms. Noise, especially low-frequency noise, the flicker effect and the resulting health implications are just some of those concerns. I have been impressed by the personal accounts of such concerns in many of the hundreds of e-mails that I have received. However, although the science may not yet be settled on those matters, the visual intrusion of wind turbines is a matter of objective fact. It is that visual intrusion that my deliberately narrow Bill seeks primarily to address.
	My Bill would specify minimum distances between turbines of certain dimensions and the nearest house. I propose that there should be no specific restriction on turbines below 25 metres in height, while wind turbines up to 50 metres high should not be located closer than half a mile to a home. Larger wind turbines up to 100 metres high should be at least a mile away, and the largest-those above 100 metres-should be at least one and a half miles from any home. There would be an important exception where the residents of homes within the buffer zone agreed to the construction of the turbines. They might do so because they stood to gain financially from the construction-something that the industry should look at more carefully-because they had received compensation for loss of amenity or the reduced value of their homes, or simply because they supported the application.
	I agree that the figures that I have proposed are arbitrary, but all rules are to some extent arbitrary. Why not have a speed limit of 75 mph on motorways? Why have different ages for the legal purchase of different products or for beginning certain activities as young people grow up? We have to draw the line somewhere, and the limits that I have set out are where I propose the line should be drawn for wind turbines. I am a traditionalist, hence the use of miles. However, I would happily accept an amendment to make the distances 1 km, 1.5 km and 2 km respectively, if that is the price of making progress.  [ Interruption. ] I apologise to my right hon. and hon. Friends.
	However, my Bill would also make possible a different approach, which is used in some European countries and which some hon. Members might prefer. That would mean specifying set-back distances from turbines in proportion to their total height. In other words, the distance from the base of the turbine to the nearest home should be at least a fixed multiple of the height of the turbine to the tip of the blades. The distance would then depend on the multiple. The 125-metre turbines proposed for my constituency would have to be set back 16 times their height to achieve a separation of 2 km, while a smaller 100-metre turbine, using the same multiple, would be set back 1.6 km. A smaller multiple would produce smaller distances.
	I am clear that there must be a reasonable space between such giants and local communities. That is the simple and, I hope, uncontroversial, purpose behind my Bill. It would add to planning law, not detract from it, and all the other tests and protections, whether they relate to noise, environmental impact or sites of special scientific interest and so on, would remain in place, so we would not see a wind farm on top of the Malverns, or Bredon hill in Worcestershire, for example.
	I have heard the simplistic objection that my Bill is intended to kill onshore wind development in England. That argument is an Aunt Sally, and is simply untrue. Indeed, by being much clearer about an important aspect of planning requirements, my Bill would enable developers to bring forward proposals for more appropriate locations with much greater confidence. My Bill would mean that arguments about distance and local acceptability could be dealt with more objectively and speedily by local planning authorities. Currently, only around a quarter of all onshore wind farm applications succeed. That proportion could increase significantly if there were clear guidelines.
	My Bill is designed to help communities that feel threatened and powerless in the face of intrusive planning applications, but it would also speed up the planning process for well-sited wind farms. The Bill should help householders and communities, local authorities-which currently lack adequate guidance on wind turbine locations-and the wind farm industry to pursue the right sites. My Bill represents an opportunity to stimulate, and more importantly to resolve, an important debate. I commend it to the House.

Martin Horwood: I oppose the Bill, although I should make it clear that I do so in a personal capacity as an environmentalist, not as a spokesman for my party- [ Interruption ]-as is the requirement with ten-minute Bills.
	Although it looks at first sight like traditional Conservative opposition to wind power, the Bill that the hon. Member for Mid-Worcestershire (Peter Luff) proposes would in fact achieve the perverse result of increasing the pressure on rural areas, including areas of outstanding natural beauty and national parks, to accept wind turbines that local people oppose. It is a Bill that would harm the prospects for wind energy in many places where it is supported by local people, and it would deepen the undermining of democratic local planning procedures. In the end, local people should decide. We in this place should not commit our usual error of creating inflexible and-in the hon. Gentleman's own words-arbitrary rules that will do more harm than good.
	Let me illustrate the problem with an example that is literally close to home. Cheltenham's first wind turbine is likely to be placed in Springfield park, in the Springbank area of my constituency. Planning permission is being applied for. It will not be big-a bit less than 18 metres tall, to the tip of the highest blade. It will generate 9,500 kWh of electricity a year, and save more than 4 tonnes of CO2 emissions a year. Perhaps more importantly, it will follow the good example of Danish wind energy by being owned by a community organisation, the Hesters Way Neighbourhood Project. The project was set up to support regeneration in one of the least well-off parts of Cheltenham, and the wind turbine will shave the best part of £1,000 a year off its electricity bill, allowing it to spend more money on its other work in the community.
	The turbine will be safe and virtually silent, with no noisy gearbox. It also has a rather striking design. I concede that beauty is in the eye of the beholder, but in general, I think that most wind turbines are rather graceful, and easily more attractive than the average pylon. The Springbank wind turbine has so far encountered very little opposition, but whether it receives community support should surely be a matter for the people of Springbank and their elected representatives. We should not contemplate a Bill that would rule out the project at a stroke-

Peter Luff: It would not.

Martin Horwood: It would, because it would impose on planning law-not on planning guidance, local area partnerships or local area policy-a rule that that turbine should not be allowed, because it is about 60 metres from the nearest dwelling. That is well inside the hon. Gentleman's proposed limit for a small turbine of 800 metres-I have translated that-away from any dwelling. So the Bill would kill that project.
	Our local and national carbon emissions reduction goals would remain intact, however. Our carbon budgets, newly agreed in the Climate Change Act 2008, which was supported by those on the Conservative Front Bench, would still be there. If the Bill were to cut off wind turbine projects such as the one for Springfield park, and doubtless many others all over the country that were anywhere near people's houses, that would increase the pressure on rural areas. Where would we put the displaced wind power if we wanted to maintain the contribution of wind power to achieving our renewables targets?
	No part of Springfield park is less than 800 metres from a dwelling; in fact, I think that we would be pushed to find any part of my constituency that is. The only part that might achieve that condition would be in the Cotswolds area of outstanding natural beauty, where even I would hesitate to support a wind turbine. But those are exactly the kinds of areas that would qualify for approval if the Bill were ever to see the light of day.
	I can cite many examples of local Liberal Democrats supporting wind power, from Leeds to Lewes, from Cornwall to the Orkneys, and from Cheltenham to Islington, but I would never lecture local Liberal Democrats, who know their area best, on whether they should support every proposed wind turbine everywhere. I am sure that many hon. Members could cite examples of insensitive energy companies trying to push through wind turbines in inappropriate locations. However, I can see the supporters of such companies rubbing their hands with glee if the Bill became law. "Surely local campaigners shouldn't be allowed to get away with opposition to this wind farm," they would argue. "After all, it complies with the Onshore Wind Turbines (Proximity of Habitation) Act 2010, which was promoted by the Member for Mid-Worcestershire in his attempt to, as he put it, settle the matter." Ironically, the hon. Gentleman's name could end up being used in planning inquiries more in support of insensitive wind power applications than against them.
	Why does the hon. Gentleman think that these inflexible distance limits are required? In his speech, he was rather vague. He spoke again and again about visual intrusion. Unlike him, however, I do not think that that is an objective fact; it is subjective and it ought to be up for discussion by local people. He also mentioned flicker, but that is a very short-range phenomenon. It is not even an issue in Springfield park, where the turbine will be only 60 metres from people's houses.
	The hon. Gentleman also mentioned health issues, but the NHS website quotes Dr. Neil Todd, who has researched the health impacts of wind turbines and can find nothing to object to. On the website stoplenchwickwindfarm.org.uk, the hon. Gentleman is quoted as saying:
	"It is my limited intention to raise the aesthetic and environmental concerns associated with large wind turbines".
	He goes on to say, as he has just told the House:
	"I happen to be a keen exponent of alternative and renewable energy sources"-
	except, presumably, in his own constituency-
	"but feel strongly that onshore wind farms are only appropriate where their visual and environmental impact on open countryside is acceptable."
	However, we have yet to hear what these environmental concerns are. How do they reduce with distance? On this, the website and the hon. Gentleman are absolutely silent.
	All the environmental organisations that I know, including the Royal Society for the Protection of Birds, support the appropriate use of wind power. When they have voiced concerns-as the RSPB has done-they have not, so far as I know, objected to any proximity to human habitation. Rather, they have objected to the possible impact on sensitive wildlife habitats and natural environments. Human beings, of course, can speak for themselves. Is that not really the point?
	The hon. Gentleman has tried to find a way to placate the growing trend of opposition to wind power. If he means what he says about local people being able to overturn the restrictions that the Bill would impose, it will probably have no impact whatever, in which case it is purely symbolic, sending a message. On the hon. Gentleman's behalf, whatever his good intentions, it sends a clear message of opposition to wind power-our most promising form of renewable energy.
	The message that I, and many other hon. Members opposed to this Bill, such as my hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes), the hon. Member for Southampton, Test (Dr. Whitehead) and many others, want to send is one of support for clean renewable energy, support for wind power when it is appropriate and well supported, and support for local people who know best what is right for their area, and do not want inflexible and arbitrary rules imposed on them from on high.
	I oppose this Bill, but I am pleased to say that it is very unlikely ever to succeed, so I shall not trouble the House by pressing for a Division.
	 Question put (Standing Order No. 23) and agreed to.
	 Ordered,
	That Peter Luff, Sir Alan Beith, Mr. Michael Clapham, Mr. Geoffrey Cox, David Davis, Natascha Engel, Mr. Mike Hall, David Maclean, Lembit Öpik, Ms Dari Taylor, Phil Wilson and Mr. Anthony Wright present the Bill.
	 Bill read the First time; to be read a Second time on Friday 6 November , and to be printed (Bill 157).

Constitutional Reform and Governance Bill (Programme) (No. 2)

Jack Straw: I beg to move,
	That the Order of 20 October 2009 (Constitutional Reform and Governance Bill (Programme)) be varied as follows:
	1. Paragraphs 2 to 4 of the Order shall be omitted.
	2. Proceedings in Committee of the whole House shall be completed in four days.
	3. The proceedings shall be taken on each of those days as shown in the first column of the Table and in the order there shown.
	4. Each part of those proceedings shall (so far as not previously concluded) be brought to a conclusion at the time specified in relation to it in the second column of that Table.
	
		
			 TABLE 
			  Proceedings  Time for conclusion of proceedings 
			  First day 
			 Clauses 1 and 2, Schedule 1, Clauses 3 to 19, Schedule 2, Clause 20, new Clauses relating to Part 1, new Schedules relating to Part 1. The moment of interruption on the first day. 
			  Second day 
			 Clauses 33 and 34, new Clauses relating to Part 5, new Schedules relating to Part 5, Clause 35, Schedule 5,  Clause 36, new Clauses relating to Part 6, new Schedules relating to Part 6, Clauses 37 to 43, Schedule 6, Clause 44, Schedule 7, Clauses 45 to 49, Schedules 8 and 9, Clause 50, new Clauses relating to Part 7, new Schedules relating to  Part 7, Clauses 51 and 52, new Clauses relating to Part 8, new Schedules relating to Part 8. The moment of interruption on the second day. 
			  Third and fourth days 
			 Clauses 21 to 25, new  Clauses relating to Part 2, new Schedules relating to Part 2, Clauses 26 and 27, Schedule 3, Clauses 28 to 31, new  Clauses relating to Part 3, new Schedules relating to Part 3, Clause 32, Schedule 4, new Clauses relating to Part 4, new Schedules relating to Part 4, Clauses 53 to 56, remaining new Clauses, remaining new Schedules, remaining proceedings on the Bill. The moment of interruption on the fourth day. 
		
	
	The basic decision on the programming of the Committee stage was determined on 20 October, when the House agreed that there should be four days on the Floor of this House. That programme motion was agreed without Division, which I took as general approbation, following discussions among the usual channels, for having four such days of debate. This programme motion provides more detail, hopefully for the convenience of the House. It proposes that part 1 be debated today. On the second day, it proposes that we deal with part 5, which corrects an important anomaly in respect of the Human Rights Act 1998 and the Scotland Act 1998 following the Somerville judgment by the Law Lords; with part 6, which deals with courts and tribunals; with part 7, which deals with the National Audit Office; and with part 8, which relates to transparency. Days three and four are then assigned for part 2 on treaties, part 3 on the House of Lords, part 4 on protests, part 9 on final provisions and any new parts of the Bill.
	Lest there be any suggestion that the measures in this Bill, which is by any standards medium-sized-it is certainly not a long Bill-have not been subject to proper scrutiny, I have brought with me the 19 reports that preceded this legislation.  [Interruption.] The hon. Member for Epping Forest (Mrs. Laing) says that she remembers them.
	Discussions on the civil service, dealt with in part 1, have been continuing for a very considerable period. Indeed, they go back to a draft Civil Service Bill published in 2004. We then saw proposals in the "Governance of Britain" documents and a statement in July 2007. A draft Bill was then published, which went before the Joint Committee on the draft Constitutional Renewal Bill, as well as before the Public Administration Select Committee. The Government have taken both those Committee reports very seriously, and their comments are reflected in the drafting of the Bill. The same applies to the other parts of the Bill. The issue of Somerville arises from concern expressed-not least by the Scottish Executive-about the anomaly that had been created. I am glad that we are now able to correct it, as it has been the subject of extensive discussion in the House and outside.
	The part relating to the ratification of treaties was also the subject of detailed proposals that were considered by the Joint Committee and others. We shall deal with the part concerning the House of Lords on days three and four. I do not suggest that it has been endorsed on an all-party basis, but it has been the subject of two periods of all-party discussion, and of a Green Paper and a White Paper which I published in 2007 and 2008.

Keith Vaz: Since Second Reading, have there been any further discussions with the Opposition about their proposal for the appointment of temporary peers? The Lord Chancellor seemed to favour the idea.

Jack Straw: There has been no formal discussion of the matter, although informal representations have been made. As I believe I said on Second Reading, I understand the proposal and it is being considered in Government, and we shall have time to return to it.
	The part of the Bill that deals with courts and tribunals has been the subject of widespread approbation. Finally, there are the parts relating to national audit and the transparency of Government financial reporting to Parliament. The national audit proposals follow on from a draft Bill from the National Audit Office.
	As the Bill was published three months ago, it cannot be said that it has been slipped before the House with no opportunity for its provisions to be discussed properly.

Lembit �pik: I have no doubt that there has been extensive consultation up to this point, but, having engaged in a large amount of constitutional debate concerning Wales and, indeed, Northern Ireland, I have observed that sometimes it is only when legislation has been implemented that we perceive deficiencies, weaknesses and aspects that we might wish to improve. Has the Lord Chancellor considered allowing further debates once the Bill has been implemented-should it become an Act-to ensure that any unforeseen or unintended consequences are rectified in the future? I think that that is very important when it comes to constitutional changes.

Jack Straw: The hon. Gentleman has raised an important point. I agree that this Bill in particular should be subject to proper arrangements for post-legislative scrutiny. I will write to him, and will make the letter available.
	Because there was a new Administration in 1997 and we regarded Scottish and Welsh devolution as high priorities, there was not the same provision for draft Bills and detailed consideration by Select Committees as there has been for the measures before us. It was necessary for us to proceed at that pace, but in a better world it would have been to everyone's advantage to have had more time.
	If I manage to catch your eye, Madam Deputy Speaker, I shall of course respond to questions that are raised.

Madam Deputy Speaker: I must inform the House that Mr. Speaker has not selected the amendment in the name of the right hon. Member for Sheffield, Hallam (Mr. Clegg).

Dominic Grieve: I entirely accept the Secretary of State's comment that the House did not divide on the programme motion at the end of Second Reading, but he can see for himself what has already been tabled for consideration over the next two days, and it clearly shows that there will be insufficient time for full consideration. Moreover, this is a constitutional Bill, and not such a long time before the Labour Government were elected in 1997 not only would such a Bill have been considered on the Floor of the House, but that would have been without any guillotine or any end date for its coming out of Committee, and therefore all Members would have had the opportunity to participate and say what they wished about what is, even in its curtailed form, a very important piece of legislation.
	How are we to do justice to this legislation when it is already apparent-I am not criticising the Secretary of State for this, but he can now see it for himself-that we have no possibility whatever of getting through the clauses for consideration on the civil service in the course of today's business, particularly as the time is now 20 minutes to 6 and the business will be finished by 10 o'clock? Having looked at what is already down for consideration on day two, I strongly suspect that there will be insufficient time then as well.
	We must also face up to the fact that, because the Government have imposed internal guillotines, as is their current practice, we will probably come across the most controversial parts of the legislation at the very end of the process, whereas if the Government had left the consideration of business so that knives did not fall, the House could have adjusted to make sure that it gave the desired amount of consideration to those parts it decided were most important. After all, some interesting ideas are floating around; the right hon. Member for Leicester, East (Keith Vaz) rightly raised the idea of term peers, but I can foresee already that we will not have sufficient time to give that the proper scrutiny and consideration that it requires.

Keith Vaz: Is not one way of dealing with this the commencement of proper discussions between the Government and the Opposition? We heard from the Lord Chancellor that there have been informal approaches, and the hon. Member for Chichester (Mr. Tyrie) raised the issue on Second Reading. One way of avoiding lengthy debates on the Floor of the House about programme motions is to have proper constructive discussions between- [Interruption.] I agree that such debates are important, but on measures of this kind, where the political parties are prepared to have a discussion, surely such formal discussions should not take place on the Floor of the House and thereby curtail the debate that is necessary on the Floor of the House.

Dominic Grieve: The right hon. Gentleman makes an important point. I, for one, am always happy to have informal discussions with the Lord Chancellor and Secretary of State on these matters-and I enjoy them-but it is important that we do not circumvent this House. The reason for holding these debates on the Floor of the House is precisely so that we do not have a Committee upstairs which can be packed with the nominees of the Government-and, for that matter, of the Opposition-and so that every Member of this House can participate in debate on this constitutional measure, including those who may disagree fundamentally with any proposal, even one brought forward jointly by the Secretary of State and myself.

Douglas Hogg: Will my hon. and learned Friend also make the point that it is profoundly undemocratic for important constitutional measures to be cobbled together by the two Front-Bench teams and for Members to be denied the opportunity to debate such matters on the Floor of the House?

Dominic Grieve: I entirely agree with my right hon. and learned Friend, and the last thing I would wish to do is deprive him of the opportunity to participate in the debate.

Oliver Heald: As the amendment paper shows, amendments have been tabled by Members who do not sit on the Front Benches but who have over the years taken a very honourable part in these debates. I am thinking of the hon. Member for Luton, North (Kelvin Hopkins), for example, who has been involved in such debates on many occasions. Amendments have also been tabled by representatives of minor parties, who would not necessarily normally be part of such Front-Bench discussions. That is why on a constitutional Bill it is important to capture the views of the whole House.

Dominic Grieve: I agree entirely.
	This Government motion offers us an opportunity to revisit something we did at the end of Second Reading, and with which I have never been comfortable. The Government know that, as a matter of principle, we oppose guillotines, particularly in respect of constitutional measures. However, we also have a desire to get through business, and we are realistic, sometimes, about the likely outcome of a vote. That having been said, here is our opportunity-and, if I may say so, the Secretary of State's opportunity. He has had the chance to see the sort of amendments that have been tabled, and it is pretty clear that a debate is developing over a wide range of issues. None of the amendments appear to be spoiling ones that do not merit consideration, and it is becoming plain that there is insufficient time for consideration. Even today's business will end, I fear, with large chunks having not been properly considered.
	The Liberal Democrat proposal-I respect Mr. Speaker's decision that we cannot vote on it-strikes me as one that the Secretary of State could properly keep in mind. Given that I feel we will have insufficient time, the one way in which we can lay down a marker of our unhappiness at this stage is to oppose the Government motion.
	I hope that, in the spirit in which I certainly intend this debate to be conducted, the Secretary of State will take the opportunity to reconsider the timetable, which has two key failings. First, I strongly suspect that it is not long enough in its totality. Secondly, the way the knives have been placed guarantees that when we finally get to day four and probably have to consider the Bill's most important clauses, it will be even more apparent than it is today that we do not have the time to do so, especially when the business has not been protected, as it has not this afternoon. We have had two statements-I do not blame the Secretary of State for that, but the fact is that it is the Government's business-which have already taken up a considerable part of the afternoon's business.
	For those reasons, I urge the Secretary of State to reconsider the position. None of the amendments tabled is in any way a means to filibuster. This is an important Bill and the fact that the Secretary of State has kept it in some ways-dare I say it-mercifully short does not mean that it does not contain plenty of meat to be scrutinised. It does-in its limited remit, which is far more limited than the Government originally envisaged. For those reasons, I hope that, by listening to this afternoon's debate, the Secretary of State will have an opportunity to reconsider his position. If he does not, we will have to register our unhappiness in the only way we can.

David Heath: I must say that I am extremely disappointed in the position that the Lord Chancellor has chosen to take on this occasion; he would not have supported it in previous incarnations. I say this because, whatever its shortcomings, this is an important constitutional Bill. It certainly does not go nearly far enough in many directions for my liking; nevertheless, it does contain matters that we ought, quite properly, to debate in this House. However, perhaps just as important are those things that are not in it, and which right hon. and hon. Members would wish to add to the appropriate legislation for dealing with constitutional reform.
	The proposal before us-programme motion No. 2-differs from its predecessor in a very important respect. As the hon. and learned Member for Beaconsfield (Mr. Grieve) said, it involves the insertion of knives. Those knives will curtail discussion. They are designed to curtail discussion. They are there to prevent Members of this House from having the opportunity of debating this constitutional Bill.
	The reason why, by convention, we consider the Committee stage of constitutional Bills on the Floor of the House is to enable every Member who wishes to contribute to have their say. Perversely, what we have before us today is a programme motion that puts us in a worse position than if we had been in Committee upstairs. It is normal practice not to have knives until such time as it is clear that progress will not be made without them. I have served on countless Committees dealing with Bills of a constitutional or criminal justice nature over the years. Normally, we have managed to discuss, between ourselves, appropriate ways of progressing business to avoid knives, wherever possible, and ensure that every single clause is given proper weight and proper consideration. That will not happen on this occasion, despite the fact that many more Members may wish to be involved. This might be a modest Bill in what it sets out to achieve, but it is hardly that modest in its physical size-it contains 56 clauses and nine schedules-so it is reasonable that we take a little time in considering it.

Douglas Hogg: Irrespective of whether or not the Bill is modest in itself, does the hon. Gentleman agree that it is a vehicle to which this House and its Members can add very substantially, if that is what this House wants?

David Heath: That is precisely the point, and I am glad that the right hon. and learned Gentleman makes it. He describes the substance of many of the amendments and new clauses that have been tabled and that are on the amendment paper. The Government, with their majority, blithely pass though this House proposals for carry-over because they do not think that they can get things through in this Session, but they will not allow carry-over in debate-even carry-over until tomorrow of matters that we will not reach in debate this evening. When we reach the knife tonight, any matters that we have not debated will simply disappear-they will not be debated by this House-and that is not a satisfactory position.
	When the Lord Chancellor comes to this place with his pile of reports and papers, he betrays the fact that the Bill before us is not the Bill that many of those reports considered-huge sections have been left out and other sections have been added. Even if it were the same Bill, what difference would that make? Today, we are making law-we have the duty to consider the Bill line by line-so it does not matter what discussion has gone on before. It may be helpful to our discussions in this Chamber, but it does not replace them. If he believes that it does, I should tell him that we have been discussing reforming the Lords for 100 years-we discussed it right back in 1911, but we still have not done it. Does he honestly believe that he could put it before this House without debate and expect to get it through? Of course he does not.
	I firmly suggest that we will not conclude consideration of the groups that are before us tonight. The hon. Member for Hendon (Mr. Dismore) will be disappointed, yet again, at the outcome of his sterling efforts to put a small measure that has a great deal of common sense behind it on to the statute book. He has proposed it in countless private Member's Bills and time has never been found for it. Now he has the perfect vehicle to introduce his reform of the civil service, yet he will not be able to do so. The right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg) has tabled some excellent new clauses for discussion, but of course we do not reach new clauses until the very latter parts of our consideration in Committee, so it is almost certain that we will not be able to discuss the matters of huge constitutional importance that he has raised.
	Liberal Democrat Members wish to debate one key proposal, on the role of the Attorney-General. It was in the previous Bill, when the reforms were supported by the Select Committee on Justice, of which I am a member; by its predecessor, the Select Committee on Constitutional Affairs; and by a minority in the Joint Committee. Yet this House is not going to be allowed to debate that very important matter because of the timetable exerted by the Lord Chancellor.

Dominic Grieve: Although the hon. Gentleman and I may differ on whether the reforms that he seeks to the role of the Attorney-General are right, it is perfectly clear that they should be debated during our consideration of this Bill-there is no reason why they should not be. It is clearly in order that it should be possible to achieve that consideration-if we had the timetable that enabled us to do so.

David Heath: Of course it should. Let me conclude by saying that if one wanted the clearest possible advertisement for the virtues of a proper business committee, where these matters are discussed in advance between the parties, including Back-Bench Members on both sides of the House, and where we can identify those issues that hon. Members wish to have time to consider properly and provide the appropriate time for them to do so, this is it.
	This is something that has not even been discussed by the Front-Bench teams; nobody has agreed to these guillotines and these knives, which the Lord Chancellor now wishes to insert. This programme motion goes against the principles of the discussion of constitutional Bills and against the interests of this House, and I hope that this House will oppose it.

Keith Vaz: I agree with the hon. and learned Member for Beaconsfield (Mr. Grieve) and the hon. Member for Somerton and Frome (Mr. Heath) that, as a matter of principle, when a Bill dealing with the constitution is before the House, it should not be the subject of a programme motion. The House of Commons ought to have an opportunity to discuss these important matters, especially given that when the Lord Chancellor introduced the Bill, he talked about this Government's terrific record on the constitution and said that this Bill was an addition to it.
	However, I am not absolutely convinced that the reasons advanced by the hon. and learned Member for Beaconsfield and the hon. Member for Somerton and Frome are necessarily the right ones. I was present on Second Reading and I recall that the hon. and learned Gentleman and the hon. Member for Cambridge (David Howarth) poked fun at the Lord Chancellor, saying that this Bill had a grand title but there was nothing in it. To be perfectly frank, the Opposition cannot have it both ways: they cannot say that the Bill is also weighty and important. I agree that the subject matter is, and even I poked fun at the Lord Chancellor, despite the great respect that we have for him, saying that given the history of what the Government have done on the constitution, this should have been a much more substantial Bill.

Dominic Grieve: I should make the position clear. I believe I said that the mountain moved and brought forth the mouse, and that is very much how I view this Bill. However, I also made it clear that elements of it, including the extremely important civil service reform and the proposals on the House of Lords, which are also extremely important and are a departure from the Government's previously stated position as to how they intend to carry out the reform of the other place, will require detailed scrutiny and, I suspect, are likely to excite a lot of participation. The question then becomes: how long should this Bill have for consideration? If the time were open-ended, the Bill would resolve itself-heaven knows we have not got much business in this place at the moment. For those reasons, the Government have got off on the wrong foot. Here is an opportunity to correct their position.

Keith Vaz: I say to the hon. and learned Gentleman that even if this were the shortest Bill in the world, he would be able to make his usual passionate and eloquent speeches, ensuring that even one of them would fill the whole four days-he is that able an advocate when he speaks at the Dispatch Box.
	The one point that I wish to make in conclusion relates to the bit of the Bill that I found to be of substance, which was that concerning the House of Lords. With the greatest respect to the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg), may I say that I was not suggesting in my intervention on the hon. and learned Member for Beaconsfield that we should substitute discussions outside this House for a proper debate inside it about House of Lords reform? However, I was very taken by the suggestions made on Second Reading by the hon. Member for Chichester (Mr. Tyrie), and others, relating to the appointment of temporary-or term-limited-peers.
	I really do not believe that four days would be enough to discuss such an issue. I hope to obtain an undertaking from the Lord Chancellor that even though we cannot discuss it in great detail because of this programme motion, if an approach is made by an Opposition party, whichever one it may be, serious and substantive discussions will take place with that party about the idea of term-limited peers. We need to find a consensus on House of Lords reform. I, for one, do not believe that we have to wait for the next election and for the next manifesto to be written in order to make another commitment about such reform, because we have done that for the past three terms. I hope that that discussion will take place. If he gives me that undertaking, that will satisfy me that there is no need for additional time to be given to discuss this Bill.

Douglas Hogg: May I associate myself with what has been said by my hon. and learned Friend the Member for Beaconsfield (Mr. Grieve) and the hon. Member for Somerton and Frome (Mr. Heath)? This is an important Bill, but, goodness knows, it could be a much more important Bill. I venture to say that most of the most important propositions that are placed before the House are in the new clauses and, as the House will know, the new clauses are for the most part grouped right at the end of day four, and therefore in all probability will not be reached.
	It is perhaps quite useful to remind oneself of the nature of some of those new clauses, which seem to me to be of fundamental importance and well worthy of discussion in this place. Those to which I will refer are all tabled in my name-I hope that I will be forgiven for that. The first would allow Ministers who are not Members of this House to appear in the House and to answer questions and participate, though not vote. That would have the advantage, would it not, of the right hon. and noble Lord Mandelson's being able to come to this House? I would welcome that.
	There is a second proposal, also tabled in my name, that we should have fixed-term Parliaments. I know that that is a matter of considerable interest to a lot of right hon. and hon. Members. On the point made by the right hon. Member for Leicester, East (Keith Vaz) about life peers' being appointed for fixed terms, I could see considerable advantages if peers were to be created for a period less than life-for five or 10 years, or whatever. Whatever the merits of that proposal, it is surely sufficiently important to attract a debate in this place. Although we might not be able to agree that proposition in the next four days or whenever, that this House should have the ability to ventilate and express that view seems quite plain.
	There is another proposal that I venture to make. War-making powers should be entrusted to this House and should not be part of the royal prerogative. Again, that seems to me to be a matter that is very much in the interests of the House. I have tabled a new clause that has the effect of making the selection of the Prime Minister dependent on an address moved by this House to Her Majesty. That again seems to be an issue that is well worth considering.
	There is the further question of Mr. Speaker's having the right to recall Parliament in exceptional circumstances rather than leaving it to the Government of the day. That again seems to me to be a matter of considerable importance. The business committee, which was mentioned by the hon. Member for Somerton and Frome, should be set up by the Standing Orders of this House so that we, and not the Government, determine, for example, the business surrounding a constitutional Bill such as that which we are now debating.
	There is also the question of referendums. I tabled an amendment to the effect that when there is a treaty between the European Union and the United Kingdom that abrogates the sovereignty of the United Kingdom or in any way significantly curtails the relationships in an adverse way, it should be subject to a referendum. The House might not agree with that, but that it should be the subject of debate seems to me to be quite plain.
	The truth is that all these proposals, some of which have been on the Order Paper in the names of other right hon. and hon. Members for some time, are all matters of substantial constitutional importance. If we were not to have this timetable motion-or, alternatively, if we had more time-the House would have the opportunity to debate them. I venture to say that no right hon. or hon. Member would say that those new clauses were unworthy of debate, but the Secretary of State's timetable motion will deprive the House of such an opportunity.

Jack Straw: Will the right hon. and learned Gentleman explain something to me? I understand his argument about the knives, but a large part of everybody's argument tonight has been over the fact that four days have been allocated. If that argument is powerful today, why was it not sufficiently powerful on 20 October to get him into the Lobby? There was no dissent to the programme motion on that day.

Douglas Hogg: The Secretary of State is being less attentive than he normally is. The truth is that one has to determine a timetable motion in the context of the amendments and new clauses that were on the amendment paper when the timetable motion came to be considered. No doubt when this motion was first debated, the House had not determined the exact character of the new clauses and amendments. Now we have; we can see the amendment paper, and it will expand. Nobody, not even the Secretary of State, has argued that the points that I have just made are unworthy of debate. The House should therefore extend the time available for debate.

Dominic Grieve: Does my right hon. and learned Friend also agree that the merit of not having knives is that, as the days progress, it might become apparent that there is insufficient time to consider the business within the Government's timetable? We could therefore make powerful representations that we needed extra days if necessary. The mischief of the knives is that we lose chunks of business at the end of each day and we are never able to recover it.

Douglas Hogg: My hon. and learned Friend is quite right. The knives are even more mischievous when we have two important statements taking up part of the time for debate. Moreover, the principle of the knives is incompatible with carry-over motions. As the hon. Member for Somerton and Frome properly said, there is a carry-over motion, which suggests that the Government want some business to be discussed, but the knives deny that opportunity in respect of the next two days.

David Heath: The right hon. and learned Gentleman will also be aware that there is a very high expectation of a statement tomorrow-the second day in Committee-so we will lose yet more time. That is again something that could not have been factored in when the programme motion was first considered.

Douglas Hogg: Indeed. I have no doubt that when we come to the third and fourth days, whenever they might be, we will find that yet more important business has been shuffled into the programme. The truth is that this House is being denied an opportunity to make very important changes to the constitution, or, if it is not ready to make them, at least to debate them. I am afraid that this Government like to shut out debate and I regard that as quite lamentable.

Humfrey Malins: I rise briefly to support my hon. and learned Friend the Member for Beaconsfield (Mr. Grieve), the hon. Member for Somerton and Frome (Mr. Heath) and my right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg). As the years have gone by, I have wondered more and more what the real duties of a Member of Parliament are. Today, they seem to be to attend to e-mails every five seconds and to respond on diverse subjects to constituents on matters about which I know very little. Our real duty, which is to scrutinise legislation-to look at it line by line-seems no longer to be important or the part of our lives that it should be.
	I remember, in the days when I was in Committees upstairs, time after time the habit crept in of putting in the knives and the guillotine motions, which meant that whole chunks of Bills that I was taking through Standing Committees were never debated, neither in Committee nor in this House. That is a tragedy.
	We all need to ask ourselves what is the role of a Member of Parliament now and what it will be over the next 10 years. Will it simply be instantly to react to a news story or can we please get back to the days when we examined legislation line by line and made our own arguments and amendments? The truth of the matter is that if I have an amendment or argument, I want to make it and I want the views of all hon. Members to be heard. If I lose the argument by a vote or because I have made it badly, that is that, but at least I have made it. Day after day, the trend continues that the opportunities for Members of this House properly to do the job for which they were elected, in my judgment, are gradually disappearing.

Oliver Heald: When we considered the devolution Bills at the start of the Government's time in office-

Nicholas Winterton: Awful!

Oliver Heald: Well, there were arguments about the quality of the Bills, but the Government accepted the principle that they would agree programme motions with the Opposition, and allow the Opposition the time that they asked for to debate the Bills. My right hon. and learned Friend the Member for Sleaford and North Hykeham (Mr. Hogg) never agreed even with those programme motions, but the Government were prepared to engage and at least try to give the Opposition the time needed to go through important matters.
	This Bill deals with the civil service, and it has taken years to come before the House. The Government promised it first in 1996, and then in almost every year since. It has been the subject of a lot of debate in the House, and the Public Administration Committee and the Committee on Standards in Public Life have both produced excellent reports on it. Even so, the Bill is a bit of a disappointment, as it does not go far enough in a number of ways.
	We have an opportunity to debate the Bill and make sure that some problems are put right. Our debate should go further than the very valuable new clauses tabled by my right hon. and learned Friend the Member for Sleaford and North Hykeham, as other hon. Members have tabled amendments that deal with vital matters such as the role of special advisers. Are they to have the sort of executive powers that were so unpopular when they were exercised by Alastair Campbell but which have proved to be such exciting entertainment in films such as In the Loop?
	Are we going to tackle, in a proper debate, the problem of the special adviser with executive powers? There are numerous amendments to clause 8, and they all need to be considered adequately. When we last debated these matters, I remember that the important question of who a civil servant is took some time. I see that we are due to have a similar debate in connection with clause 1.
	In my view, the Government are going backwards and becoming ever less democratic. The surprise is that the Lord Chancellor, who has always been thought to be someone who respects the House and who wants to be at one with its traditions, should be backsliding in this way. The programme motion does not give adequate time for what is an important constitutional debate.
	When we considered the devolution Bills, we had 36 days on the Floor of the House. That was agreed by the Government, but the Lord Chancellor is engaged in cheese-paring by offering a mere four days to consider this Bill in Committee-four days that will be interfered with by constant statements.

David Heath: The four days may be sufficient-I do not think that they will be, but they may-but the point is that they can be extended by means of a further programme motion in the future. What cannot be extended are the knives that the Secretary of State is trying to insert today. If he were to withdraw this programme motion, he would be back to the previous motion that set a four-day limit, at the end of which we could see how much progress we had made.

Oliver Heald: I absolutely agree, and the hon. Gentleman is another veteran of these debates. My point is that the House as a whole has important amendments to debate, in connection with what is a constitutional Bill. In the past, the Government have accepted the principle that we should have the time to do a proper job, so it is poor for a person in the Lord Chancellor's position not to be prepared to listen to the House. Even at this late stage, he could remove these knives, which will have exactly the effect described by the hon. Member for Somerton and Frome (Mr. Heath) and others.

Jack Straw: With permission, Madam Deputy Speaker, may I say that I understand the concerns of the House? I could be forgiven for thinking that there was general approbation for devoting four days to this Bill, as on 20 October-just two weeks ago-the House agreed that proposal without Division. Not even the right hon. and learned Member for Sleaford and North Hykeham (Mr. Hogg)-who, as the hon. Member for North-East Hertfordshire (Mr. Heald) just noted, normally rises to oppose any programme motion-opposed it. I was not party to the discussions through the usual channels, and I would not disclose them even if I were, but I took it from that result that there was general agreement.
	At the heart of this argument is the question of how the knives should fall. The special Committee chaired by my hon. Friend the Member for Cannock Chase (Dr. Wright) is examining the question of programming. It is also looking at the idea of having a business committee, to which I am highly sympathetic.
	In the old days of guillotining, programming used to happen with a vengeance. One motive for inserting knives was to help the Government, but another was to assist debate. In this case, it is clear that a lot of concerns have to do with the business that will arise on the third and fourth days-

Dominic Grieve: indicated assent.

Jack Straw: I see that there is approbation for that. A knife is proposed to fall today after debate on the proposals in respect of the civil service, and another on the second day-tomorrow-after debate on a number of important issues. Once we get to the third day, no knife will fall for two days. So the quicker that we can deal with the proposals on treaties and protests, the sooner we can get on to those on the House of Lords.
	My judgment is that the proposals on treaties and protests need not take a huge amount of time, as there is general agreement about them. There will be a debate about the House of Lords proposals, but we will have two days for it. The motion protects that debate, rather than running it into the buffers.

Dominic Grieve: I am sure that the Secretary of State can see how much things have changed. On Second Reading, he quite reasonably presented a picture of a number of days being set aside for debate. That may not have been perfect, but then he comes along today, as the debate is about to begin, and changes the rules with internal knives. That guarantees that large chunks of today's business alone will never come to be considered. It also means that he has lost the option of being able to offer the House a further day if he thinks that it has genuinely sought to make progress and yet has been unable to do so. That is the problem with his proposal.

Jack Straw: The hon. and learned Gentleman knows very well that the business of the House is in the hands of the business managers. Of course I take account of what has been said today, and I shall pursue the matter with those business managers, but I cannot offer undertakings as to what will follow. I want these matters to be debated properly-

Andrew Tyrie: rose-

Jack Straw: I am sorry, but the debate is about to end.
	I say again that no Bill has been the subject of greater prior discussion than this one-
	 Three quarters of an hour having elapsed since the commencement of proceedings on the motion, the Deputy Speaker put the Question (Standing Order No. 83A).
	 The House proceeded to a Division.

Madam Deputy Speaker: I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.

The House having divided: Ayes 293, Noes 230.

Question accordingly agreed to.

Constitutional Reform and Governance Bill

[Relevant  d ocuments:  Report of the Joint Committee on the Draft Constitutional Renewal Bill, Session  2007-08, on the Draft Constitutional Renewal Bill, HC 551-I and-II, and the  Government response, Cm 7690.  Tenth Report from the Public Administration Select Committee, Session 2007-08,  on Constitutional Renewal: Draft Bill and White Paper, HC 499, and the  Government response, Cm 7688.  The letter from the Chairman of the Joint Committee on Human Rights to the  Secretary of State for Justice dated 26 October 2009. ]
	[1st Allotted Day]
	 Considered in Committee

[Sir Alan Haselhurst  in the Chair]

Clause 1
	Application of Chapter

David Howarth: I beg to move amendment 12, page 1, line 13, leave out paragraph (c).
	Clause 1 simply relates to the scope of the civil service part of the Bill, following on from the draft Civil Service Bill in 2004 and the draft of this Bill in 2008. The first question that arises from our amendment is whether the Bill should apply to GCHQ. The Bill excludes the coverage of all the security services, the Secret Intelligence Service, the Security Service and GCHQ, but, in the case of the latter in particular, there is a history that suggests that the Government, at least, have not always been of the opinion that GCHQ should be excluded.
	In the 2004 consultation on the draft Civil Service Bill, the Government said that there were no obstacles to including GCHQ within the scope of the statutory basis of the civil service. They then said:
	The Government has no objection in principle to having civil servants who work in the field of intelligence covered by the draft Bill. Because there is no operational impediment to their inclusion, GCHQ staff will be within scope of all the provisions of the draft Bill.
	But, in the 2008 draft Constitutional Renewal Bill, GCHQ was quietly removed, and the Bill before the House today retains that position.
	From what the Government have said to the various Committees that have discussed the Bill before us, I gather that their justification for excising GCHQ from this legislation is that GCHQ should be treated
	in the same way as the other Security and Intelligence Agencies.
	The trouble is that that was not the thinking in 2004, when the Government were prepared to treat GCHQ differently, and it is far from clear why the change of policy has occurred.
	During the Public Administration Committee's investigation of the Bill, the First Civil Service Commissioner expressed concern about the exclusion of GCHQ employees, especially about the fact that they would neither have the right to be appointed on merit nor be able to access any statutory complaints procedure. The Government, in reply to those concerns, merely said that
	appointments to GCHQ will, as a general rule, continue to be made on merit,
	which implies that some appointments to GCHQ will not be made on merit. Given the extraordinary level of technical skill and knowledge that is required to work at that agency, it seems extraordinary that anyone could ever be appointed to work there except on merit.
	The amendment would change the 2004 proposal, which has not been properly justified and, in terms of the employees themselves and other regulatory aspects of the civil service, is not justified. I ask the Government to correct this omission at this stage of the Bill's proceedings.

Francis Maude: We have tabled new clause 33, which has been grouped with the amendment.

Alan Haselhurst: Order. Is the right hon. Gentleman leaping ahead? At the moment, we are on amendment 12, and new clause 33 is in the next group.

Oliver Heald: I am concerned about the exclusion of GCHQ from the definition of what is a civil servant for the purposes of this part of the Bill. It is hard to see why GCHQ employees should not be covered by such provisions. Why should GCHQ not be managed by the Minister but by a civil service employer? Why should there not be a code of conduct that requires integrity, honesty, objectivity and impartiality? Why should the Civil Service Commission be unable to set appointment rules that mean that appointments are on merit? Why should an employee who feels that he is being asked to do something that is in breach of the code of conduct be unable to go to the commissioners and ask for redress? It seems odd that the Government would want to exclude that particular institution from the Bill.
	I can understand that slightly different considerations apply to the Secret Intelligence Service-MI6-because it has its own statutes that provide similar protections, and it might seem inappropriate to want to legislate to repeal completely those provisions, which are presumably, for these purposes, adequate. However, GCHQ is not in the same position, as the Government recognised in 2004. What has changed that makes the Government suddenly feel that GCHQ must be treated differently from the rest of the civil service? I am sure that if somebody who works there was asked, Who do you work for?, they would say either the Ministry of Defence or the civil service; they would not want to call themselves employees of anything else. Given that it is logical that GCHQ should be covered by the Bill and given that there is no real reason why the prerogative powers should be used instead of management being exercised under this legislation, I would be therefore be interested to hear the Minister's explanation.
	I am worried that this may be one of those cases that we get from time to time when Ministers and civil servants say, We don't want to fetter GCHQ in any way, and that what is proposed is just the product of a defensive approach that is against the spirit of the age, which is to be as transparent as possible. In that case, I believe that there is no real reason why the amendment should not succeed.

Tony Wright: I want briefly to add my questions to those that have been asked. I have not heard an explanation as to why GCHQ was to be included in these provisions back in 2004 and why it is now excluded; I do not know what thought process or consultation has produced that change. I do not know why it would be thought appropriate that promotion on merit would not apply to the employees of GCHQ. I do not know why it would be thought that it was not appropriate for those employees to have the right to appeal to the civil service commissioners. I do not know whether the staff who work at GCHQ have been asked where they would like to sit. There may be good reasons for those exclusions, but none has yet been produced, so I anticipate the Minister's answers to those questions.

Oliver Heald: I am grateful to the hon. Gentleman for giving way. Does he share my concern that this may be another case of, Let's be neat and tidy and keep all the secret bits together, ignoring the fact that the two secret services have their own Acts of Parliament with similar provisions to those in the Bill? It is completely wrong to look at it in that way, because it is not neat and tidy.

Tony Wright: I was not giving way to the hon. Gentleman; in fact, I had concluded my remarks. However, I think that we are all asking more or less the same questions and looking forward to the same answers.

Martin Horwood: I was recently privileged publicly to welcome Her Majesty the Queen to GCHQ, along with the mayor of Cheltenham. I would not like to inflate my own importance in that, given that the mayor and I were almost the only people present who could be publicly photographed. During that visit, I jokingly asked whether Her Majesty needed security clearance, and was told, I think equally in jest, that she did not, because by definition GCHQ was almost part of her household. Although that might have been said in jest, it highlights the anomalous position in which the secret agencies find themselves, which was identified by the Joint Committee on the draft Constitutional Renewal Bill.
	GCHQ is a large organisation that employs thousands of people-thousands of my constituents-and we are dealing with important employment rights in terms of the right to be recruited on merit, and important procedures in terms of having the right to complain to the civil service commissioners. In his evidence to the Joint Committee, the Cabinet Secretary gave some absurdly extreme examples of how those rights might be applied, suggesting that GCHQ might have to place equal opportunities job advertisements in  Pravda or that the civil service commissioners could be allowed public and unlimited access to personnel files at GCHQ, which would be equally inappropriate. It is equally possible to imagine circumstances in which a proper complaints procedure, with statutory force, to bodies such as the civil service commissioners might be helpful to GCHQ employees. Better that disgruntled staff have the right to appeal in confidence to the commissioners than that they take their complaints to the media, for instance. An intelligence agency is different from the rest of the civil service, but it cannot be beyond the wit of Government to propose amendments that might accommodate the concerns of the Cabinet Secretary and others while still bestowing on my constituency workers at GCHQ statutory rights very similar to those of other civil servants.
	If the Government will not accept the amendment tabled by my hon. Friend the Member for Cambridge (David Howarth), how do they propose to place GCHQ on a similar footing to the other secret intelligence agencies? That question must be asked. I understand that GCHQ staff would like to be treated increasingly in the same way as those at the other intelligence agencies, and I am sure that that is an appropriate desire. If they are excluded from the terms of the Bill, it is not clear how that aim will be achieved.
	The battle for GCHQ's trade union rights, so disgracefully denied by Mrs. Thatcher's Government, was won under this Government, and they should be rightly proud of that. In seeking to extend what are proper rights and entitlements to GCHQ employees-

David Winnick: rose-

Martin Horwood: I was about to conclude, but I happily give way.

David Winnick: On 25 January 1984, the House was notified by the then Foreign Secretary that the right of GCHQ employees to belong to a trade union was being taken away. From then until 1997, Labour Back Benchers, and Labour Front Benchers as well, constantly argued that that right should be restored, which it has been, as the hon. Gentleman said.

Martin Horwood: I think that that is broadly what I said. The Conservative Government's actions at that time damaged morale in the intelligence services considerably and, if anything, weakened national security instead of strengthening it.
	The Government should take pride in their attention to the proper employment rights of civil servants at GCHQ and give active consideration to the amendment, which seeks only to do the same thing.

Michael Penning: Can the Minister clarify whether GCHQ is now being considered in the same way as the other intelligence services? As we have heard, that has been sought for some time. Its inclusion in this part of the Bill would be a clear indication that the Government have looked again at how it is seen in the context of the intelligence services. What exactly is GCHQ's position? It looks as though there has been a turnaround, or change, in Government policy with the result that GCHQ is now linked with the other two intelligence services; otherwise, I cannot think why it is included in the exclusions listed Bill.
	Can the Minister clarify what will happen to civil servants who have been seconded to GCHQ from other Departments or agencies? Will they be protected in any way? They obviously have to sign the relevant documentation and the Official Secrets Act, but there are civil servants who are seconded to GCHQ from other Departments and other agencies around the world. What will be their position? Will they be covered by the Bill?

Angela Smith: I thank hon. Members for their comments. I shall first set out the scope of the amendment and then address their questions.
	Clause 1 sets out the scope of the provisions relating to the civil service and specifies the parts of it to which they will not apply, such as the Northern Ireland civil service, the Northern Ireland Court Service, the Security Service, the Secret Intelligence Service and GCHQ. The Bill also makes it clear that staff employed overseas, known as locally engaged staff, are not covered by its provisions.
	The amendment tabled by the hon. Member for Cambridge (David Howarth) would bring GCHQ within the scope of the Bill. I can reassure hon. Members that staff who work at GCHQ are civil servants, and I understand that Members wish to explore the Government's reasons why those civil servants are not to be treated in the same way as those who are covered by the provisions in question.
	Hon. Members said that GCHQ staff were included in the 2004 Bill. Recent world events have, of necessity, driven the three UK agencies in question-GCHQ, the SIS and the Security Service-to work together more closely and in a more dynamic and joined-up way. They share intelligence and resources to meet ever-changing priorities in their operational work. By responding to threats and attacks as a joined-up community, they can act more effectively and efficiently.
	GCHQ works closely with the other agencies, and all three already operate under statutory provisions that cover their activities and conduct-in the Security Service Act 1989, the Intelligence Services Act 1994 and the Regulation of Investigatory Powers Act 2000. It therefore makes sense for all three to operate on a similar footing, and the Joint Committee on the Bill endorsed that approach. The three agencies also have robust and independent staff complaints procedures, and the funding for them is grouped together.
	The Select Committee on Public Administration commented that
	unlike most of the rest of the civil service, GCHQ and the other Agencies are already established in statute, and...they have to operate under particular conditions that do not apply to most of the rest of the civil service. The legislation covering the Agencies sets out to ensure that their activities remain within set purposes, and it establishes complaints mechanisms for the public if they are concerned about these activities.
	It went on to suggest that the Joint Committee may wish to explore the issues of staff raising complaints and whether staff should continue to be recruited on merit in future.
	Hon. Members have mentioned the need to treat GCHQ staff in the same way as those at the security and intelligence services. The Joint Committee agreed with that but asked for assurances that GCHQ staff would be given the same right of access to an independent complaints mechanisms as those at the other agencies and that, as a general rule, staff at GCHQ would be recruited on merit. In the Government's response, we gave both those assurances.

David Howarth: But is not the point that there is no statutory basis for those promises, whereas there is for staff in the other services in the legislation that she mentioned?

Angela Smith: The Government have given assurances that staff will have an independent complaints mechanism and that they will be recruited on merit, and I can repeat those assurances to the hon. Gentleman and the Committee today.
	I am grateful to the hon. Member for Cheltenham (Martin Horwood) for mentioning the rights of GCHQ staff. If he had not, I would have done. It was this Government who gave trade union rights to GCHQ staff, as my hon. Friend the Member for Walsall, North (Mr. Winnick) mentioned, and we are proud of that. I hope that hon. Members are reassured by my repeating our assurances on protection for staff.

Oliver Heald: rose-

Michael Penning: rose-

Angela Smith: I give way first to the hon. Member for North-East Hertfordshire (Mr. Heald).

Oliver Heald: Does not the right hon. Lady understand that the whole purpose of part 1 of the Bill is to put on a statutory basis the protections that civil servants have had? It is not good enough for her to say, I am making an assurance, because the whole purpose of part 1 is to put things into law, not have them on the basis of assurance. I do not know whether she has understood that, but it is what the whole campaign for a civil service Bill has been about.

Angela Smith: Before I respond, I believe that the hon. Member for Hemel Hempstead (Mike Penning) wanted to intervene as well.

Michael Penning: My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) is exactly right. Part 1 sets out the protection to be given to civil servants. If the Minister can give assurances to the Committee and to civil servants, why are they not in the Bill? That is what part 1 is all about.

Angela Smith: The assurance that I can give hon. Members is that the same right of access to complaints procedures will be available to GCHQ staff as to staff of the other agencies. I understand that GCHQ staff were consulted about that and raised no objections.

Gordon Prentice: Under what circumstances would appointments at GCHQ not be made on merit?

Angela Smith: I would expect only in very rare and exceptional circumstances, because appointments are made on merit. As the general public would understand it, all appointments are made on merit and the person most appropriate for a post is chosen. The Joint Committee asked for an assurance that in general appointments would be made on merit, and the Government gave that assurance. I therefore ask the hon. Member for Cambridge to withdraw the amendment in the light of the assurances that I have given the Committee.

David Howarth: I was hoping that the Minister would provide an answer to the question that we have all been asking, which is why the Government have changed their stance since 2004. We have not received any explanation of that at all. I was also hoping that she might be able to provide chapter and verse about the statutory protection of GCHQ staff that would put them on the basis that the Bill offers to other civil servants. She was not able to do that, either.
	It seems to me that the Minister's only argument is that she is offering assurances from the Dispatch Box, but they are exactly the sort of assurances that would apply were the whole civil service still to be established merely on the basis of the royal prerogative. They seem to me simply a repetition of what is in the Bill.

Michael Penning: Can the hon. Gentleman give us a clue as to why the Minister would not indicate what the exceptional circumstances would be in which someone was not promoted on merit? Why does he believe she did not let the Committee know that?

David Howarth: I do not know, and that point is by far the strongest case for the amendment that has been established in the debate. Appointments to positions at GCHQ must be on merit, because they are technical jobs. What does it mean for an appointment not to be made on merit?

Alan Beith: Will my hon. Friend give way?

David Howarth: I shall attempt to answer the question, and then my right hon. Friend might provide a better answer.
	It seems to me that an appointment not on merit would be an appointment on political grounds, and I cannot see under what circumstances there could be an appointment to GCHQ on political grounds. My right hon. Friend might enlighten us.

Alan Beith: I was going to put it to my hon. Friend that I was as baffled by the Minister's reply as he was. I am looking around the Chamber, and I believe that it happens that I have spent more time than anybody else who is in their place inside GCHQ talking to people there about precisely what they do. I have never met anybody there at any level who did not appear to have been appointed on merit.

David Howarth: I am sure that that is the case, so why the Government desire to have this loophole is entirely mysterious to me. Because of that, I wish to press the amendment to a vote.

Question put, That the amendment be made.
	 The Committee divided: Ayes 51, Noes 281.

Question accordingly negatived.

David Howarth: I beg to move amendment 10, in clause 1, page 2, line 21, at end add-
	(5) (a) Within two months of this section coming into force, the Minister for the Civil Service shall issue a list of all bodies and organisations that are to be treated for the purposes of this Act as part of the Civil Service.
	(b) The Minister for the Civil Service shall from time to time review the list referred to in (a) and shall issue an amended list if he believes it appropriate to do so.'.

The Chairman: With this it will be convenient to discuss the following: New clause 33- Civil Service annual report-
	'(1) The Minister for the Civil Service must publish and lay before Parliament an annual report on the functioning of the civil service of the state.
	(2) The Minister for the Civil Service may publish separate reports covering civil servants who serve the Scottish Executive or the Welsh Assembly. Before publishing these separate reports the Minister must consult the First Minister for Scotland or the First Minister for Wales (as the case may be).
	(3) Such a report must include but is not limited to-
	(a) details on the numbers of civil servants by each government department and agency;
	(b) the costs of civil servants by each government department and agency;
	(c) a comprehensive definition of the civil service of the state for that year.
	(4) The First Minister for Scotland must lay before the Scottish Parliament any report under subsection (2) that covers civil servants that serve the Scottish Executive.
	(5) The First Minister for Wales must lay before the National Assembly for Wales any report under subsection (2) that covers civil servants that serve the Welsh Assembly Government.'.
	Clause 1 stand part.
	The Committee will know that the list of amendments selected is provisional. Having had time to reflect on the matter, I thought that it might be for the convenience of the Committee if I included clause 1 stand part in this grouping, as the remarks that I sense hon. Members may wish to make would not then be restricted.

David Howarth: A central issue in this Bill is the question: to whom does it apply? Who counts as a civil servant? There has been debate for many years on the merits of a civil service Bill, and about the importance of giving statutory protection to civil servants, so that they do not rely simply on the good will of the Government of the day in important aspects of their working lives. Obviously, once one accepts the principle of statutory protection for civil servants, the question of who counts as a civil servant becomes very important.
	In this Bill, the Government have simply not attempted any definition, or even any description, of what counts as the civil service. The Minister may be able to point me to a part of the Bill where I can find such a definition, but I have not been able to find it. Clause 1(1) simply states that:
	this Chapter applies to the civil service of the State.
	It makes no further attempt to say what that means.
	In contrast, in the Government's consultation on the 2004 Bill, they said:
	Because there is no satisfactory, authoritative and comprehensive definition of the term 'Civil Service', in order to achieve the necessary clarity and certainty about coverage, the draft Bill proposes that there should be a comprehensive listing of every part of the Civil Service to which the Bill is to apply.
	Then, the Government accepted the fact that it is difficult to define the civil service in abstract terms, so the solution was to list in the Bill the organisations and bodies that would count as part of the civil service for the purposes of the Bill. The 2004 Bill included that list in a schedule. That is an important list, because it includes organisations that, if the only definition in the Bill was
	the civil service of the State,
	could be defined as being in or out of the civil service.
	For example, is ACAS in the civil service or not? Are the people who work for ACAS civil servants or not? The 2004 Bill included ACAS. I do not want to go through the entire list, but there is ambiguity about other similar bodies. For example, does the civil service include regulatory organisations such as Ofwat, the Office of Rail Regulation and Ofsted, or the various inspectorates such as Her Majesty's fire service inspectorate, or the Health and Safety Executive? Are the people who work for those bodies civil servants or not? In every case, the answer according to the 2004 Bill is yes. All those organisations were covered. Are they covered by the present Bill? The problem is that we do not know.
	This amendment asks the Government why, if in 2004 they thought that it was not satisfactory to leave the question alone and that we needed not only a vague general definition but a list of the organisations to which the Bill would apply, they have now suddenly changed their mind, and say that the lack of an authoritative and comprehensive definition is satisfactory. This is not an abstract point. It is important, because on this question turns who counts as a civil service employer-and that is important because it is the only way we have of telling whether the various rights in the Bill apply. In particular, clause 9 includes the right to an investigation by the Civil Service Commission. How can it possibly be a matter of dispute whether someone is entitled to invoke that right?
	I hope that at some stage in our discussions we will consider the duties of civil service employers and Ministers to act impartially towards their employees. We do not know whether that will apply to some sets of employees unless we know who counts as a civil servant. The important issue of appointment on merit was raised in the previous debate. Does the requirement of appointment on merit apply to a particular job? If we cannot tell whether that is the case, the Bill collapses into unacceptable uncertainty and vagueness.

Oliver Heald: Many of the bodies that the hon. Gentleman mentions, over which questions as to whether they are part of the civil service may arise, perform functions that can be controversial-such as regulators or the Health and Safety Executive. It is all the more important that it should be clear whether civil servants working in those organisations will have the protection of the Act, and can make complaints if an attempt is made to interfere with a controversial decision.

David Howarth: That is an important aspect of the question. Are civil servants protected from improper pressure, for example? Do they have the protection of the code? If they do not, what is their protection? The hon. Gentleman is right. Many of the bodies concerned are charged with making judgments with which the Government of the day might not agree, which makes it even more important for us to know whether they are covered.
	On amendment 10, I hope that the Government can provide a better explanation of their position than they did on the previous amendment. I shall not comment now on new clause 33, which has been grouped with my amendment, except to say that we agree, of course, with the part of it that demands that the Government tell us who counts as a civil servant.

Francis Maude: I apologise, Sir Alan, for being a little previous in attempting to intervene during the last grouping. I have worked out that I last led for my party during the Committee stage of a Bill in 1992-so perhaps I am a little rusty. However, I hope that I shall get the hang of it before long.
	The Conservative party supports the proposal in amendment 10, but new clause 33, which stands in my name and in those of my hon. Friends, goes further. The Bill has been in gestation for 150 years: it has taken a long time to get here. It does some very good things, and we support its purpose of putting the civil service on to a statutory basis-but it is deeply eccentric that after 150 years, we have a Bill to put the civil service on to a statutory basis that does not say what the civil service is. This is a moveable feast-and one that is broadly at the discretion of the Government. It seems to be almost at the whim of the Government, too.
	I am always astonished that if a Member of Parliament puts down a parliamentary question to the Cabinet Office about civil service numbers, answer comes there none. The question is referred to the Office for National Statistics, as if the number of civil servants were an external phenomenon that the Government tried to track out of interest, but they had no concept of its being a crucial management tool. In truth, at this stage, it is a management tool of considerable bearing on reducing Britain's ballooning budget deficit.
	The fact is that the numbers of civil servants have varied enormously. The Government claim that they have reduced the size of the civil service. They claim to have achieved 86,700 work force reductions as part of the Gershon programme. Civil service employment was 522,000 in 2008. I accept that that was down from the 2004 peak of 570,000, but it was still higher than the 516,000 level of 1997.
	The recent fall is deceptive. There has been a significant expansion in the size of the quango state, which is not shown up in civil service head-count figures, and there has been a growth in the number of quangos classified as public corporations, rather than as part of the civil service. In 1996, 89 such bodies were classified as public corporations, but by 2008 that number had doubled to 178. Staff in public corporations are generally not classified as civil service employees for civil service head-count purposes. No fewer than 568,000 staff are now employed by public corporations, compared with 525,000 civil service employees. Mysteriously, only 31,000 of those public corporation staff are included in the civil service head count.
	There has also been a shift of bodies from the civil service into public corporations. For example, the Forensic Science Service became a Government-owned company in 2005 and was transferred out of the Home Office, so was no longer counted in civil service head counts.

Oliver Heald: My right hon. Friend will have seen that part 1 of the Bill sets up, as a body corporate, the Civil Service Commission. Will the people who work there be civil servants?

Francis Maude: I look forward with interest to the Minister's response to that question- [Interruption.] She is looking anxiously to the civil servants Box for advice on that important matter-so at least it should come from the horse's mouth.
	Executive non-departmental public bodies, with the exception of three Crown NDPBs, are not counted within civil service head counts, and regional development agencies are not deemed to be part of the civil service either. In the last year for which there are numbers, there were more than 200,000 NDPB employees. Furthermore, a series of what are effectively public bodies are not deemed to be part of the public sector at all-the Carbon Trust, Envirowise, the Energy Saving Trust, Network Rail and UK Financial Investments Ltd are not counted as civil service, central Government or even the public sector, yet all are funded by the Government.
	Of crucial importance, at a time when it is enormously important for the health of the country that the Government can, in the years to come, get more for less, given the pressing demands of the budget deficit, is the fact that the growth in the number of employees has been accompanied, sadly, by a productivity decline. The ONS's own figures show that between 1999 to 2006 there was an average fall of 0.7 per cent. per year in education productivity and a decrease of 2.1 per cent. per year in social care productivity, and that between 2001 and 2005 there was a decrease of 2 per cent. in health care productivity.
	We would like a more transparent and efficient civil service that is a better place in which to work. Many extremely capable people, imbued with a public service ethos-we value that enormously-work in the civil service, but morale is very low. That is partly the result of a lack of transparency, efficiency and productivity. Public accountability is crucial, which is why we think that there should be a civil service annual report clearly laying out the definition of the civil service. That is what new clause 33 would achieve. We support amendment 10, which was moved by the hon. Member for Cambridge (David Howarth), but if that does not proceed to a vote, we will want a Division on new clause 33 at a later stage.
	It is important for there to be a proper definition of the civil service, and for the numbers and costs associated with civil servants, in each Department and agency, to be laid out. The civil service has been waiting since, I think, 1854-not the current crowd of civil servants, clearly-for a civil service Bill, and it would be almost an insult were this eventual enshrinement in statute to be without any attempt to define it. It would then remain in the gift of the Government to decide arbitrarily and at whim who is to be covered. We therefore wish there to be the possibility of a Division on new clause 33, if amendment 10 does not proceed to a vote.

Alan Whitehead: I want to address the narrow point about the precise definition of a civil servant in clause 1(1). As hon. Members have pointed out, that subsection states that
	this Chapter applies to the civil service of the State.
	Clause 1(4) says:
	In this Chapter references to the civil service...are to the civil service of the State.
	It then excludes the parts mentioned in subsections (2) and (3) that we have discussed already.
	If we then seek further guidance by going, as one normally would, to the definitions in the Bill, we find, in clause 18, the following definitions:
	In this Chapter...'civil servant' is read as stated in section 1(4),
	and
	civil service is read as stated in section 1(4).
	We are therefore returned to the start, rather in the manner of one of those telephone calls when someone tries to get through to pay their electricity bill, but is returned to the number that they first dialled, without any satisfaction of their complaint. It is not just that the Bill apparently contains no extensive definition, but that such definitions as it does contain are completely circular.
	That concerns me; indeed, I raised the matter on Second Reading in an intervention on my right hon. Friend the Secretary of State for Justice. In answer to my question about whether the Bill's provisions cover the civil service as it is now, as opposed to its undifferentiated form after Northcote-Trevelyan, he said:
	I hope they do, but as my hon. Friend raises this point let me add that I am happy to ensure that they do. There is an issue to do with the growth of next steps agencies and non-departmental public bodies, which have arisen since the reforms introduced by the previous Administration in the early 1990s. It is certainly of concern to me that NDPBs can appoint their own staff and that they are not public servants; that creates difficulties and can lead to unacceptable and unjustifiable levels of pay and wage drift, as well as other anomalies and conditions.-[ Official Report, 20 October 2009; Vol. 497, c. 803.]
	My right hon. Friend has clearly thought about the matter in depth and considers there to be some anomalies and problems, as well as some issues relating to the question of when a civil servant is not a civil servant.
	If we are to place the civil service on to a statutory footing, as I hope we will, in respect of requirements for its practice and all that that entails, which I warmly welcome, the most elementary starting point would be to know who we are putting on to a statutory footing. I appreciate that that is a difficult problem. I also appreciate, on the basis of the precise points that the Secretary of State made in reply to my intervention on Second Reading, that the issue has arisen to some extent as a result of the differentiation over time, and substantially so relatively recently, of what one might describe in common-sense terms as the civil service. Hon. Members have already given examples of boards and bodies that one might consider to be part of the civil service in common-sense terms, but which turn out not to be. There are also examples of bodies that one would think were not part of the civil service, but which turn out to be just that. It is therefore important to find, one way or another, a mechanism for the Bill to perform that service of defining who is and who is not a civil servant for the purposes of the rest of the legislation.
	Incidentally, a little while ago I tabled a written question that sought to define that point in terms of NDPBs, agencies and various other things. I regret to say that my question has not yet been answered, but perhaps any answer that might be provided in the fullness of time could provide some illumination of what we are discussing in connection with the Bill.
	Amendment 10 might not quite fit the bill in that respect. However, at the very least, I would like my hon. Friend the Minister to provide in her reply to this debate an assurance that the definitions in the Bill will be urgently considered, and that some thought will be given to introducing some mechanisms, whether in the Bill or associated with it, to clarify what we are talking about in the rest of the Bill as it proceeds through the House.
	I am not sure that new clause 33 fits the bill. Although it says that the Minister for the civil service
	must publish and lay before Parliament an annual report on the functioning of the civil service of the state,
	it does not really take us any further on the fundamental question of what the civil service of the state is. Although the civil service of the state might indirectly be defined in the laying of a report on its functioning before Parliament, that is not necessarily the case.
	I hope that my right hon. and hon. Friends on the Front Bench will consider how a mechanism might be found to supply that definition more satisfactorily, accepting, as I think everybody in the House does, that this is by no means an easy task and that any definition would by no means be constant, but that such a definition is nevertheless important for the integrity of the Bill as it leaves this House.

Several hon. Members: rose -

Nicholas Winterton: Order. Before I call the next speaker, may I remind the Committee of the decision taken by the Chairman of Ways and Means to include the clause stand part debate in the debate on the group headed by amendment 10?

Andrew Tyrie: I am grateful for that ruling, because some of my remarks will range more widely than those that we have heard hitherto. I agree with everything that I have just heard, in a typically thoughtful and interesting speech from the hon. Member for Southampton, Test (Dr. Whitehead).
	When Lord Falconer described the Bill in his evidence to the Joint Committee not as a constitutional reform or renewal Bill, but as a Constitutional Retreat Bill, he was basically correct. The radicalism of the early prime ministerial statement in 2007 has been virtually entirely lost in this legislation. The removal of the clauses on the Attorney-General, among many other things that have been referred to today, is a reflection of that.
	However, Lord Falconer was wrong about one thing: civil service reform, as embodied in clause 1. The clause applies part 1 of the Bill to the civil service of the state, on which new clause 33 would give us an annual report. Clause 1 is radical, but in a curious way: it is a triumph for the status quo. Indeed, in places it even offers the possibility of restoring the status quo ante for the civil service. The clause entrenches the principle of an independent, impartial and permanent civil service recruited on merit. In doing that, we need to recognise that, by comparison with the civil services of many other major democracies, we are at one extreme in our levels of impartiality and impermanence. It is on such issues that I am at my most conservative, and I welcome this triumph of the status quo.
	We have had-and to a large degree we still have-a civil service that works. The history books suggest that since Northcote-Trevelyan dealt a blow to patronage, we have been well served by the people who have come into the civil service, and we are still well served. Anybody who has worked there will know the sense of duty, commitment and loyalty that the civil service can show to the Government of the day. There is still such a thing in this country as a public service ethos, and the best of them in Whitehall have it in bucketfuls. If clause 1 makes a contribution to reaffirming that ethos, the Bill will have been worth while. The civil service is an important pillar of our constitution. This legislation will strengthen that pillar, if only a little.
	In this triumph of what I have described as the status quo, we need to realise that we are setting aside many other approaches to the relationship between elected Ministers and, on the one hand, Parliament and, on the other, the appointed civil service. One of those approaches, which has often been discussed, would be to make the civil service more directly accountable to Parliament, as the Institute for Public Policy Research has suggested. Another approach, favoured by the think-tank Reform, would be to give Ministers more say over the direction of the permanent civil service establishment. That would take us in the direction of the United States. A third approach would be to keep most of the civil service as it is, but to superimpose at the top a cabinet system in each Department.
	I will not linger on those approaches, except perhaps briefly on the third one. My guess is that one reason that support for civil service legislation has gathered pace in many quarters, especially in Whitehall itself, is that we have, de facto, tried the cabinet system over the past decade and, having tried it, found it wanting. I wonder whether that is why Lord Butler, among others, changed sides on this issue. He was a former opponent of a civil service Bill; now he is a supporter.
	When people refer to the growth of presidentialism under Tony Blair, what they mean is the growth of a cabinet of advisers, largely temporary and party political, right at the heart of No. 10 and No. 11. Their position was reinforced by Orders in Council in 1997, giving advisers direct authority over civil servants. That was a profound mistake that has rightly been reversed. Cabinets should not be allowed to become part of our political culture. The bypassing of the civil service that came with that, and the impact of sofa government, were both disastrous for us. Clause 1 and its companions do not guarantee that that will not happen again, but they send a clear legislative signal that that is not how our civil service should operate. That is why I said earlier that this chapter of the Bill will entrench not only the status quo but, to some degree, a status quo ante.
	When I was in Whitehall, I was not a supporter of proposals for a civil service Bill. I thought that such legislation would be a waste of parliamentary time. However, I then sat on these Benches in the early years of the Blair Administration watching the new Labour Government bypassing officials and prejudicing the ability of the civil service to offer impartial advice to the Government, and that led me to conclude that we might need legislation to protect the civil service from the new culture of advisers and to signal Parliament's support for the ethos of public service set out in the civil service code of conduct, which had recently been improved prior to the arrival of the Blair Administration.
	This part of the Bill lays the ground on which a proper relationship between the civil service and politicians can be maintained for the future. That relationship requires Ministers to provide strategic direction to the civil service. It also requires the civil service, led by permanent secretaries, to implement that direction, having warned Ministers-and having been given a reasonable opportunity to be heard by Ministers, a point that Robin Mountfield has made on numerous occasions-if those officials think that the direction of a policy is deeply flawed or would result in a failure of delivery.
	I do not pretend that the lack of leadership that we have seen from time to time recently is a uniquely Labour disease. It has afflicted previous Governments as well. It is, however, reasonable to ask how things have operated recently. For example, how much strategic direction can have come from the merry-go-round of ministerial reshuffles that we have had? I think that we have had four Secretaries of State for Transport in three years, four Defence Secretaries in four years, and four Home Secretaries in five years. The right hon. Member for Airdrie and Shotts (John Reid) takes the record, having held seven Cabinet posts in eight years. He described the Home Office as not fit for purpose, but it was ministerial leadership, not the civil service, that was not fit for purpose.
	From what I have seen, the civil service aches for good leadership. It wants to implement the plans of elected Governments, not to thwart them. It is when politicians fail it-and only then-that some civil servants are transmogrified into a caricature of Sir Humphrey. This is not just about a failure of strategic leadership, however. Ministers have also used the civil service in ways that they should not have. The Neill Committee warned, as early as 2000, that Ministers were pushing senior civil servants to the margin in the provision of advice, while interposing their own advisers. The role of the adviser was being transformed into that of a spin doctor, a fact reflected most notoriously in the Jo Moore affair at the Department for Transport, Local Government and the Regions. Imagine the state of morale when the permanent secretary in that Department was quoted as saying-I shall not use his exact language; I shall just use the first letter of some of his words-the following:
	We're all f***ed. I'm f***ed. You're f***ed. The whole department is f***ed. It's the biggest cock-up ever. We're all completely f***ed.
	Morale must have reached a terribly low level for that exchange to have taken place, and that applied right across Whitehall, not just in that Department.
	The Better Government Initiative-a group of Britain's most senior civil servants-stated in a recent report, which is available on the web:
	Providing candid advice has always been a difficult and potentially risky task for the civil service. There are suggestions-
	that phrase is typical mandarinese-
	of a loss of confidence amongst civil servants that this is a part of their job.
	We need this legislation. It was envisaged in the 1850s, and it is typically British that it should have taken us 150 years or so finally to get round to it. There have been several periods in which having the civil service on a statutory footing might have helped it, including periods during the past decade. Let us now get the job done.

Michael Penning: I can say that the Minister of State, Cabinet Office, the right hon. Member for Basildon (Angela E. Smith) is a friend of mine, as I have known her for many years, but by the time we get to the end of this part of the Committee stage, I might be stretching that friendship an awfully long way. I shall be doing that not out of spite, however, but because I want the Bill to be successful. It is an enormously important Bill, and we have waited an awfully long time for it. That is why I rise to support amendment 10 and new clause 33. I accept the point made by the hon. Member for Southampton, Test (Dr. Whitehead) that, on their own, neither does everything that he and I are looking for, but together they are a damned sight better than what is in the Bill at the moment.
	I am very suspicious of why the Government have not defined what they mean by the civil service, and perhaps the Minister will explain that to me when she responds to the debate. We have heard that earlier legislation specified all the way through which organisations were part of the civil service. That was excellent for Parliament, as well as for the employees of those agencies and Departments, who knew exactly where they stood. On the day before an important report is due to be published on MPs' expenses, the need for trust in this Chamber and in the Government is paramount. So why on earth have the Government not set out in the Bill what a civil servant is, and what the civil service is?
	An organisation that comes under my shadow remit is the Food Standards Agency. I do not know whether it is part of the civil service or not. It rightly tells me that it is an arm's length organisation set up by Parliament, with a chair, and that it is an independent advisory body. As far as I understand it, however, its employees are civil servants. We would never know such things from looking at the Bill.
	I am suspicious about where all the civil servants might have gone. My shadow responsibilities involve the Department of Health, and if I am lucky enough to become a Minister of the Crown in that Department, I shall want to know how many civil servants I am responsible for, where the money is going and what departments within that structure are accountable. The Bill, as it is structured, gives me absolutely no idea. I have asked people who come to visit us from the various agencies whether they are civil servants. Some say yes, and some say no. The public, and the civil service, want these arm's length organisations to be set out in the Bill, right at the start, so that we know where we are.
	My right hon. Friend the Member for Horsham (Mr. Maude) spoke earlier about the size of the civil service. Under Gershon, the civil service should have shrunk; actually, however, we find that it has not. Perhaps the Government are worried that if they build the numbers into the Bill, we would all know just how big the Government payroll is within the civil service.
	We know that there has been a huge increase in the number of consultants in the civil service and Departments. Do they fall under the remit of the Bill? Do they have its protection? Some of them have very senior roles in Departments. Senior consultants are working in the Department of Health, for instance, with civil servants working below them. Such people do not have civil service contracts; they are consultants in a Department. Are they covered by the Bill? If they are not, how do the civil servants working below them know where they stand?
	I suspect that there has been some smoke and mirrors in the civil service, so that numbers have been lost from the payroll but people have come back in through another door as consultants. There is some evidence of that. We need to know the exact costs involved in the civil service-new clause 33(3)(b) would make the Government come forward each year with those exact costs-but how can we calculate them if we have no idea which Departments, which quangos, which arm's length organisations are part of the civil service?
	It is important that both amendment 10 and new clause 33 are agreed to in order to take the Bill forward. They are not perfect-I accept what the hon. Member for Southampton, Test said-but they are a lot better than what we have now and we might be able to build on them as the Bill goes through the House.

Oliver Heald: I want to follow the remarks of my hon. Friend the Member for Chichester (Mr. Tyrie) in saying how welcome it is that chapter 1 applies to the civil service of the state and that there is protection for the impartiality and objectivity of our civil service, which I believe to be precious. During the early years of the Labour Government, that was damaged by a change in the way in which the Government did their business. Some of the traditional, formal methods by which we had ensured good government came to be damaged during that period. It is right to say that there is a different climate for the civil service generally today, with more people entering it at a later stage rather than trained civil servants moving up the grades. That also impacts on why it is necessary to have a civil service Act.
	There is a long history to this issue-my right hon. Friend the Member for Horsham (Mr. Maude) went back 150 years-but as recently as 1996 the Liberal Democrats and the Labour party had a joint commission and pledged themselves to a civil service Act. The commission said in clear terms before the 1997 general election that a civil service Act should
	give legal force to the Code-
	the civil service code-
	which should be tightened up to underline the political neutrality of the Civil Service
	and
	clarify lines of Civil Service and ministerial accountability and responsibility.
	Soon after the election, in July 1998, in response to a House of Lords report, that commitment was confirmed.
	In 2000, the Committee on Standards in Public Life, on which I sit-albeit not on the current Kelly inquiry into Members' expenses-produced its sixth report and called for a timetable for a civil service Bill. In their response in July 2000, the Government confirmed their commitment to a civil service Act. In 2001, the Committee on Standards in Public Life asked whether the Government were going to go ahead, and Sir Richard Wilson, giving evidence, said yes. Ministers again provided the commitment.
	In 2002, the right hon. Member for Kingston upon Hull, East (Mr. Prescott), then deputy leader of the Labour party and the Deputy Prime Minister, said that the Government would produce the Bill. Needless to say, nothing happened. The Public Administration Committee produced its excellent report towards the end of 2002 or early in 2003 and subsequently a draft Bill, but again nothing happened. In fact, I promoted the Bill and presented it to the House. We had a debate on 21 January 2004, in which the Government again said that they had given a commitment and would produce their own Bill-the Chairman of the Committee may well remember this-before the end of the Session. They did, but we were not given the parliamentary time.
	It is somewhat surprising that it has taken these 13 long years to get to the point where we are now. The issue of who is a civil servant and how the problem should be dealt with was raised in a debate on 21 January 2004 by the then Member for Milton Keynes, North-West. The hon. Member for Southampton, Test (Dr. Whitehead) might well have been involved in that debate. The point has been made repeatedly since, so it seems extraordinary that when a Bill is before us, we find no full definition of civil servants of the state. The Minister may well tell us that it will be left for the Civil Service Commission to decide in every case whether a person who is making a complaint is a civil servant, although it may be that the Government are expecting the courts to sort it out. That is clearly unsatisfactory after this long period of gestation.

Michael Penning: My hon. Friend's point about the courts is an important one. As I understand it-I am not a learned gentleman-the courts look at Parliament's intent when an Act is brought into being, but we do not know what Parliament's intent is because it is not built into the Bill. How, then, will the courts be able to judge it, when we do not know the Government's exact intentions?

Oliver Heald: My hon. Friend makes the point exactly-what are the courts to make of it? That is worrying if we look at the problems of recent years, which my hon. Friend the Member for Chichester mentioned. Let us take the concern that Alastair Campbell and Jonathan Powell had executive authority over civil servants, were more powerful than the Cabinet and were able to tell civil servants right across Whitehall what to do-the key concern that they had executive powers. The concern about the inquiry into Dr. David Kelly is another example, as Lord Hutton found it difficult to piece together exactly what had happened because there were no records or minutes kept of meetings with civil servants, as they had been conducted in sofa government ways.
	That had an effect on the formal, traditional ways of doing things. Certainly when I was a Minister, the idea that a civil servant would fail to make a note of a meeting, or even of a ministerial telephone call, did not occur; civil servants would listen in and make notes of the discussions. A record was kept and everyone was protected by it. By the time we get to the Hutton report-this is also true of the Butler report into the war in Iraq-there had been a breakdown in those traditional ways of doing things, which had previously safeguarded the impartiality and objectivity of the civil service, while also being for very good for Ministers, because they provided some formal structure and pattern to the way in which they carried out their work.
	It is the breakdown in standards, together with some further changes in the civil service, that led senior former civil servants to say that some form of legislation must be enacted. It is welcome that the Bill is where it is, but it is sad that we have not been able to find in it a definition of a civil servant that is capable of holding water. We want to see protections enshrined in statute partly because, as I alluded to earlier, the nature of the civil service is changing.
	There was a time when there was a very standard entry procedure and individuals would move up through the grades, being educated as public servants as they went. In a world where many people are now rightly coming into the civil service without that background, it is important to have more structure than we had before. Over the years, it has been said that we need a provision that clearly defines the role of Ministers' special advisers and the formal civil service. I am glad that the Bill does that, but I also want a proper definition of what a civil servant is, so that we do not end up with a lot of court cases and a mess instead of what should be a major reform.

Angela Smith: I thank hon. Members for their thoughtful contributions and I hope to deal with the points that they have raised.
	Most of the debate seems to have revolved around amendment 10, but clause 1 lists the parts of the civil service to which the Bill will not apply. That approach was supported by the Joint Committee that considered the draft Constitutional Renewal Bill. Hon. Members have suggested that the approach in our 2004 draft Civil Service Bill was to define the parts of the civil service to which the Bill applied by providing general descriptions and then listing particular inclusions as well as exclusions.
	My hon. Friend the Member for Southampton, Test (Dr. Whitehead) asked whether the Government would continue to try to find the best way of dealing with the matter. The Government have done that on numerous occasions since 2004, which is why we are in our current position. After consideration, it was felt that more frequent amendment of primary legislation would be required if we were to ensure the maintenance of an accurate list. The Bill therefore lists the parts of the civil service to which the provisions do not apply, a move that was supported by the Joint Committee.
	Concern was expressed about who would and would not be defined as a civil servant. The hon. Member for North-East Hertfordshire (Mr. Heald) said that it would be difficult for civil service commissioners to have to decide, in each case, who was and who was not a civil servant. In all the years in which they have operated, they have never raised that concern; nor have they raised it in the context of the Bill. I understand and am grateful for the hon. Gentleman's concern on behalf of the commissioners, but they have expressed no such concern themselves.
	I explained the exclusions in our debate on an earlier amendment. However, I can tell the hon. Gentleman again that the civil service, ministerial and non-ministerial Departments, executive agencies and non-civil servants are not covered.  [Interruption.] I am trying to be helpful.
	The hon. Member for Cambridge (David Howarth) asked what was meant by
	civil service of the State.
	I can tell him that exactly the same term was used in the Superannuation Act 1972, and no problems have arisen from that.

Andrew Tyrie: When the Minister says that non-civil servants will not be covered, does she understand that there is an element of circularity in her definitions?

Angela Smith: I use the term merely for the purpose of clarity.
	I was surprised that the hon. Member for Hemel Hempstead (Mike Penning) was not embarrassed to ask his question. I assure him that it does not test our friendship, because, as always, I am happy to help. However, he admitted that, as a shadow Minister, he does not even know whether, were he ever to be a Minister, one of the bodies that would come under his responsibility would consist of civil servants. I can tell him that it would, and that I should be happy to help him in the future.

Michael Penning: What I was asking was whether that body fell within the scope of the Bill. I was not asking about its current status. The Bill refers to no organisation, so it is a question of interpretation.

Angela Smith: The hon. Gentleman is completely wrong. As I have made clear, civil servants who are not excluded will fall within the Bill's ambit.
	The right hon. Member for Horsham (Mr. Maude) mentioned those employed by non-departmental public bodies. As he said, they are not part of the civil service. They have deliberately been placed at arm's length, and it has deliberately been ensured that they are not part of Government Departments.

Oliver Heald: The Minister may have just answered the question. A list was drawn up in 2004. Is she saying that all employees of the bodies that were on that list on 2004, on which there had been consultation, are civil servants, and that the only people who are not are those employed by the security services-as the Bill says-and by non-departmental public bodies?

Angela Smith: Everyone who is a civil servant is obviously included unless he or she is specifically excluded. Everyone who signs the civil service code is included unless he or she is specifically excluded.
	The right hon. Member for Horsham asked an interesting question-whether commissioners themselves were civil servants. The answer is that they are not, because they are appointed by the Queen.
	New clause 33 would require the Minister for the Civil Service to publish an annual report giving details of the structure, cost and state of the civil service, and proposes that separate reports may also be published in respect of the devolved Administrations. Currently, each Department and agency, along with the devolved Administrations, publishes an annual report setting out in detail its work, performance, structure and financial position. The Office for National Statistics is responsible for publishing, each quarter, the number of civil servants employed by each Department and agency. The ONS also produces annual statistics that provide for more detailed information on the composition of the civil service. The detailed information, published by the ONS as Civil Service Statistics, contains more than 40 different tables, and a range of demographic and other information.

Francis Maude: Does the Minister not find it slightly embarrassing that the Cabinet Office, where she is Minister responsible for civil service matters, has shrugged off any knowledge of civil service numbers, and regards the information as something to be tracked randomly by the ONS? Is that information not central, and should not the centre of Government be in possession of it?

Angela Smith: Mr. Winterton-[Hon. Members: Sir Nicholas.] I am sorry; Sir Nicholas. I should have thought that the ONS would be quite insulted-as I hope you are not by my mistake-by the word randomly, and by being dismissed in such a way. I can think of no more authoritative body to provide statistics for the Government, the House and the wider public.
	The civil service commissioners publish an annual report on their activities, which could include comments on the state of the civil service. I would argue that comprehensive information is already available. If new clause 33 were accepted, it would duplicate current practice. It would impose additional burdens and costs that would be disproportionate to any perceived benefit-which I cannot identify-and it is really not necessary.

David Howarth: This has been a very frustrating debate. Whenever the Minister has been asked whether a certain body is part of the civil service, she has asserted with absolute certainty that she knows the answer, and has given an answer. If the answer were as clear as that, the Government would surely be in a position to provide a definition, so why have they not done so?
	The Minister has said that anyone appointed by the Queen is not a civil servant. That is a good start, but why? She has said, although I was not too sure about this, that everyone who is employed by a non-departmental public body is not a civil servant-or was it every member of one? Again, I was not too sure. Why? Perhaps the members are appointed by the Queen, but obviously the employees are not. I am not sure why that is so clearly the case. Either the Government have at the back of their mind a definition that they are not revealing to us, or they do not have one and are simply trying to look certain about something of which they are not really certain.
	This has been an interesting debate. Many points were raised about the general principle of the Bill, which I support for the reasons given by the hon. Member for Chichester (Mr. Tyrie). The most important part of the debate on this amendment and new clause, however, was initiated by the hon. Member for North-East Hertfordshire (Mr. Heald), who asked what would happen if it was not clear, in a particular case, whether the Civil Service Commission should act or not. If a person complained to the commission that activity within Government was in breach of the code, would the commission have jurisdiction or not? In the first instance, that is an important question for the commission, but what happens if the applicant disagrees with the commission's decision and goes to court? Are the Government saying that they are giving up on the question of what counts as a civil servant and that they will leave it up to the courts, and are doing so in circumstances where, if one were looking for parliamentary intention, it is not possible to tell what that is, because we in this Committee do not know what it is?
	The hon. Member for Hemel Hempstead (Mike Penning) gave the example of the Food Standards Agency. The FSA was included in the 2004 draft Bill, but the other FSA-the Financial Services Authority-was not, so the question is this: which FSA are we talking about? The answer to that is unclear.

Andrew Tyrie: Does the hon. Gentleman agree that the courts will use Pepper  v. Hart? They will look at what has been said here, and they will find what I think was the only clear definition, which is that anybody who has signed the civil service code is a member of the civil service. That seems to suggest that anybody who decides they want to sign it can then call themselves a civil servant.

David Howarth: I am glad the hon. Gentleman raised that point, because that appeared to be the import of what the Minister said. Since the civil service code is on the web, I presume anyone can print it off and sign it, and thereby define themselves as civil servants. This does not make any sense at all.

Michael Penning: As I understand it, a consultant working in a Department has to sign the civil service code, but they are a consultant rather than employed by the civil service. Will they fall inside or outside the definition?

David Howarth: That is a very good question. Judging by the Minister's account, it depends on whether the person wants to sign it, and if they do want to sign it, then they are a civil servant. This is not at all satisfactory. The problem in terms of the courts is that they will try to work out the intention of Parliament and we are trying to get the Minister to put on record what her intention is, but she seems entirely incapable of doing so. She gives the impression that she has some sort of definition to hand, but we cannot work out what it is. She gives examples, but if one attempts the normal case law technique of joining them together to produce a rule, one cannot work out what the rule is that lies behind those examples. This seems to me to be entirely the wrong approach, and if the Joint Committee supported that approach, it could not have been in a position to work out what it was doing.

Tony Wright: I have some sympathy with what has been said, but as someone who has sat through countless discussions of this issue over the years I have to say that the conclusion the Government have arrived at is the conclusion most people have arrived at: that this is the only simple way to deal with the matter.

David Howarth: If the distinguished Select Committee Chairman is saying that the only way to deal with this is to leave it to the courts, that is a counsel of despair, especially in circumstances such as these in which we are not offering the courts any guidance. The approach in the 2004 Bill seems to me to be better. If one cannot offer a coherent definition, the next best thing to do is not to do nothing, which is what the Government are doing, but to provide a list. The 2004 Bill did that, and amendment 10 would require the Government to go down that road. It would also give them the power to change the list from time to time.
	I do not want the Committee to divide twice on the same issue, and I recognise that new clause 33 includes within it the same idea that the Government should be under an obligation effectively to tell us who they are counting as being in the civil service. New clause 33 would also goes further than amendment 10 by requiring important information about costs, and I fully support what was said about that. Therefore, if an opportunity arises to support new clause 33 in the Lobbies, I will urge my hon. Friends to do so, but I beg to ask leave to withdraw the amendment.
	 Amendment, by leave, withdrawn.
	 Clause 1 ordered to stand part of the Bill.
	 Clause 2 ordered to stand part of the Bill.

Schedule 1
	  
	The Civil Service Commission

Tony Wright: I beg to move amendment 55, page 33, line 22, leave out ', in exceptional cases,'.
	Following the tortuous nature of the previous discussion, I offer brevity and simplicity. I also rise to press the merits of an amendment that I assume the Government will have no difficulty in accepting. I simply want to remove the single phrase in exceptional cases from the reporting requirements being laid upon the Civil Service Commission, as I can see no reason why it should be included.
	In the previous exchanges my right hon. Friend the Minister prayed in aid the commission and said it had raised no issues about the matter under discussion. It is fair to say, however, that it has expressed concerns about its ability to undertake investigations of code-related matters and of civil service-related matters when it thinks it is appropriate to do so and to report on those to the House.
	When giving evidence to the Public Administration Committee back in July, the First Civil Service Commissioner said:
	I think we agreed in the end that we might well be involved in an investigation if we saw a matter so serious or in fact so systematic, and I repeat that because, if what we were hearing from any source was that there was a systematic concern, then clearly that would be exactly the kind of issue that might cause the Commissioners to launch an investigation of their own to see just what was going on.
	The First Civil Service Commissioner also wrote to me very recently, on 19 October, and stated:
	Despite some concerns about the potential for politicisation and resource constraints, the commissioners recognised that there may be occasions where it would be right for the commission to carry out such an investigation if there were clear evidence of a significant breach of the code. We would therefore support an approach which gave the commission in addition to the duty to consider a complaint from the civil servant-clause 9-the discretion to investigate matters at its own initiation. We would envisage that the commission would want to exercise this discretion only in cases where the burden of suspicion was substantial.
	Therefore, we have the commissioners firmly saying that they do think it would be appropriate for them to have the ability to undertake investigations of civil service issues on their own initiative, and by extension to report on such matters under their reporting obligations. We have a similar arrangement with the parliamentary ombudsman, who is a servant of this House. We ask the ombudsman to produce reports on cases and to produce an annual report, but we explicitly give that office the ability to make special reports to the House where there are particular issues it wants to bring to the House's attention. It is entirely sensible and straightforward that we would give a similar provision to the commissioners. They want a provision of this kind and it seems sensible for them to have one, and I am sure the Government cannot think of any reason why they cannot have it. I am simply asking for these restrictive words to be removed from the Bill.

Eleanor Laing: I rise very briefly simply to support what the hon. Gentleman has just said. I agree with him.

Nicholas Winterton: That is the briefest speech I have heard.

Michael Penning: I also rise to support the amendment tabled by the hon. Gentleman. When the Minister rises to say whether she supports this provision, can she say exactly what the exceptional circumstances are? Exceptional circumstances could mean something completely different to me, to the Minister, the courts, to the civil service or to the commission. What does exceptional circumstances mean? If the Minister can define that exactly in law, the judges will not necessarily have such a field day when this provision comes before them, which I am sure it will.

David Howarth: I was going to raise exactly the same point, and would simply add this. Who decides whether a case is exceptional? If the commissioners decide what is exceptional, the amendment of the hon. Member for Cannock Chase (Dr. Wright) does not achieve very much, because it is purely within the commission's discretion to decide. If Ministers are to decide, that would obviously be completely objectionable. Ministers should not be able to make such a decision; that would undermine the commission's independence. If the courts are to decide, that just adds to the complication of the situation without any obvious benefit.
	The Minister's choices in replying to the debate appear to be these. She should either say that the commission itself gets to decide what the exceptional circumstances are-in which case, why is the phrase in the Bill at all?-or she should just give way to the amendment proposed by the hon. Gentleman.

David Heath: I am grateful to my hon. Friend for giving way; I just want us to proceed with this debate in good order. Several Members, including my hon. Friend, have used the phrase exceptional circumstances. Actually, the term in the Bill is exceptional cases, which is slightly different. It is easier to define exceptional circumstances than it is the exceptional cases that must be brought to one's attention by the report. In fact, it is even more difficult for the Minister to defend that inclusion within the schedule.

David Howarth: I thank my hon. Friend, who is absolutely right: the phrase is exceptional cases, which raises a further question about what kind of case is involved. Does this mean a case brought before the commission on a particular complaint? What other kind of case is it?  [ Interruption. ]

Michael Penning: The Justice Minister is indicating from a sedentary position that Members of this House should not stand up and scrutinise the Bill, which gives us an indication of the way this Government are going.

Michael Wills: Will the hon. Gentleman give way?

Michael Penning: No, I am not going to give way. I absolutely agree with what the hon. Member for Cambridge (David Howarth) has just said. The phrase exceptional cases-I am sorry, Sir Nicholas, if I slightly misled the Committee when I used the phrase exceptional circumstances-makes it even more difficult for the commission to define what it should look at and what it should not. Surely the logical thing to do is to remove this phrase and let the commission decide, which is what it is there for.

David Howarth: Yes, that is a very good point.
	I apologise, Sir Nicholas-I was attempting to make a speech even shorter than that of the hon. Member for Epping Forest (Mrs. Laing). I failed to do so, but I support the amendment.

Angela Smith: I think I can help hon. Members on this point-again. Let us see whether they will accept these assurances.
	Schedule 1 contains provisions relating to membership of the new Civil Service Commission; the appointment of the First Civil Service Commissioner and the commissioners, and their tenure of office; the status and powers of the commission; the regulation of its proceedings; the appointment of staff; arrangements for assistance; delegation and committees; financial provisions; accounts; publication of the commission's annual report; and transitional arrangements relating to the old Civil Service Commission.
	The schedule states that the commission must produce an annual report
	as soon as practicable after the end of each financial year,
	and may, in exceptional circumstances-

David Heath: Cases.

Angela Smith: Cases; my apologies. It may,
	in exceptional cases, prepare a report at any other time about any matter relating to the carrying out of its functions.
	Amendment 55, proposed by my hon. Friend the Member for Cannock Chase (Dr. Wright), would delete the phrase in exceptional cases. Although I think the amendment is unnecessary, we agree about what this provision should mean for the commission. The legislation gives the commission powers to prepare and lay before Parliament a report, in addition to an annual report, about any matter relating to the carrying out of its functions. This reflects the system practice.
	Members have asked why the word exceptional has been used. The commission has produced an annual report each year since 1855. It covers activities undertaken during the year in upholding the principle that selection for appointment to the civil service must be on merit and on the basis of fair and open competition. The report also covers its other work, such as its role in promoting the core values of the civil service as set out in the civil service code, and a summary of finances during that year.
	Since 1855, the commission has never produced an additional report, so by definition, it would be exceptional if it were to do so. However, the provision is there in the legislation should it wish to do so. So exceptional is a statement of fact, in that to produce an additional report would be exceptional. However, it should be within the power of the commissioners to take that decision if they feel they want to produce another report.
	I therefore urge my hon. Friend to withdraw his amendment. The points that he made are covered, in that, if the commissioners want to produce a further report, they are entirely able to do so under the legislation.

Tony Wright: It is really very difficult to keep a straight face, Sir Nicholas. What is really disappointing is that when the process of this Bill began, all the Front Benchers were saying, Of course we will be open to amendments. This Bill is not fixed in stone, and we will bring it forward in a spirit of taking sensible amendments. Indeed, when the Cabinet Secretary was in front of our Committee just last week, the same was said when we raised a similar issue with him, so I am afraid there is a mismatch here with the spirit in which we all engaged upon this Bill. There is a genuine desire across the House to get the Bill done. It is rooted in a political consensus, so it is very difficult to understand why the Government want to insist on something that, as the Minister has just described it, is completely unnecessary.
	Given that we simply want the commission to be able to make a report if, in certain circumstances, it wants to do so, why on earth would we want to stop it? The commission itself would do that only if it thought the occasion warranted it. We have reached a level of absurdity, and I say to my right hon. Friend the Minister in a spirit of comradeship that resistance is not necessary at this point.

Angela Smith: I shall be brief. My hon. Friend talks of our resisting his amendment, but all I am saying to him is that the points that he has raised are covered in the legislation. There is nothing in the legislation to stop the commissioners, at any time, producing another report if they wish to do so. What he suggests is already covered, so the amendment is unnecessary.

Tony Wright: In the spirit of not only co-operation and not being difficult, but total mystery, I beg to ask leave to withdraw the amendment.
	 Amendment, by leave, withdrawn.
	 Question proposed, That the schedule be the First schedule to the Bill.

David Howarth: I wish to raise two points and ask two questions about the schedule. Both points relate to the independence of the commission and both were raised by either the Joint Committee or the Public Administration Committee in their deliberations on the Bill. The first point is about the power of the Government-in this case, presumably the Minister for the Civil Service-over the commission's budget. Can this Minister explain what the procedure will be for setting the commission's budget? Will the Government of the day-the Minister for the Civil Service, in particular-have the power to set conditions on the way in which that budget is spent or to limit the content of the commission's activities using a budgetary mechanism? If that is the case-some concern was expressed on this point by the two Committees-that will, of itself, undermine the commission's independence.
	The second point relates to the appointment of the first commissioner, which is obviously an important matter. I understand that the Bill says that the first commissioner is appointed by the Government, after consultation with various other people. A proposal was made-I believe by the Public Administration Committee-that as that was not enough to ensure the independence of the first commissioner, the appointment should be subject to the agreement of someone outside government; one suggestion was that the agreement of the Leader of the Opposition should be required in order to ensure the complete independence of the first commissioner. I have not heard from the Government as to why they rejected that particular proposal, and I wish to ensure that the Civil Service Commission should be as independent as possible.

Angela Smith: Schedule 1 contains provisions relating to the membership of the new Civil Service Commission-the hon. Gentleman mentioned that-and the other issues relating to the appointments that I referred to a moment ago. He asked about the commission's financial independence. Provisions provide for the commission to publish and lay before Parliament an annual report, as has been discussed. As now, that can include a summary of information on the funding of the commission. That is an obvious vehicle for the commission to bring forward any concerns that it might have about the adequacy of its funding or any comments that it wishes to make on the funding. Indeed, an exceptional or special report could be prepared to address those particular concerns.

David Howarth: I thank the Minister for that assurance, although I am not sure that it is enough to ensure the independence of the commission, especially if it will get into trouble for complaining about conditions governing its own budget or, at the very least, be worried about whether making a complaint would make the problem of its budget worse the following year.

Angela Smith: It is embarrassing to see so much cynicism in just one hon. Member. The report is to be made to Parliament and it will be for Parliament to make a judgment on whether it thought the funding was adequate. I do not think that Parliament would wish to take action against the commission in any way at all; I think that Parliament would expect the commission to make a response on the adequacy of its funding. Obviously, the Government are bringing this forward, making sure that there is full independence for the commission and putting it into statute, so they want the commission to be an independent body and to function well. I can, thus, allay the hon. Gentleman's fears on that account.
	The provisions in the Bill do not, in any way, affect the commissioner's access to the Public Administration Committee. That is an important and influential safeguard for the commissioner's role in regulating the Executive. As the hon. Gentleman mentioned, the Joint Committee recommended two amendments to the draft Bill's schedule in respect of commissioners. The first was for a requirement that the commissioners should be appointed on merit, on the basis of fair and open competition. The second was that compensation for loss of office should be extended to all commissioners, rather than just the first commissioner. The Government accepted both those recommendations, and the published schedule to the Bill incorporates those amendments. In addition, the Minister for the Civil Service must consult the First Ministers of Scotland and Wales and the relevant Opposition leaders.
	 Question put and agreed to.
	 Schedule 1 accordingly agreed to.

Clause 3
	  
	Management of the civil service

Pete Wishart: I beg to move amendment 48, in page 3, line 7, at end add-
	'(6) The Minister for the Civil Service shall delegate the appointment and approval of senior civil servants to senior posts in the Scottish Executive to the Head of the Home Civil Service, acting on advice of the Civil Service Commission.'.
	This is a simple and modest amendment that seeks to transfer the appointment of senior civil servants from London to Edinburgh. May I start by giving a bit of the context before I get into the meat of the amendment? This is not the preferred position of the Scottish National party. We would, quite obviously, prefer to see a properly devolved civil service accountable to Scottish Ministers and the Scottish Parliament, much like those that we observe in normal legislatures around the world-in normal, self-respecting Parliaments. That is what we seek in terms of a civil service for Scotland, but it is not what we intend to seek when it comes to the appointments of senior civil servants. We would prefer that decision to be made by the First Minister of Scotland, and we would see him as responsible for making those key appointments. That is what happens in any self-respecting normal Parliament or legislature throughout the world. That is what we would preferably seek in order to try to ensure that we had the proper deal and arrangements for Scotland.
	Through amendment 48, I am putting forward the agreed position of the Labour party, the Conservative party and the Liberal party, as agreed with the Calman commission. I am prepared to set aside our preferred option-what we would ideally like to see-so that progress can be made. This is important. Progress can be made, and sometimes it is important for us to set aside our preferred and ideal options so that we can move forward to consensus. Sir Nicholas, you know me well enough to know that I always try to be as helpful as possible in such cases. This evening I am trying to be helpful, constructive and positive so that we can make progress on this serious key issue.
	I do not want the Front Benchers from all the political parties to get up and thank me for tabling this amendment. That is not necessary; I am not looking for it, and I would feel a little embarrassed if they did so, so perhaps they can restrain themselves and remain seated while I make the rest of my speech. However, I expect to secure from the Front Benchers of all the Calman parties their overwhelming and enthusiastic support. I expect to see them and their right hon. and hon. Friends going through the Lobby, overwhelmingly backing their position. I expect that, because it is their agreed position, as agreed with the Calman commission. There can be no excuse whatsoever for a failure to support my amendment this evening. I am looking forward not just to support but to enthusiastic support.
	The only thing that surprises me is that it has been left to me, a humble Scottish National party Member, to table an amendment on the agreed position of the Labour party, the Conservative party and the Liberal party. I thought that when we had an opportunity to make progress on some of the very important Calman recommendations, there would almost have been a race. I thought that the Labour and Conservative Whips Offices would have tried to outdo each other in a stampede to be the first to the Public Bill Office to table this amendment. But we have not heard a peep from them, and it is left to a humble Back Bencher from the Scottish National party to get to his feet and try to ensure that we get some progress on this matter-to try to advance the agreed position of the Labour, Conservative and Liberal parties. I find it a bit odd that it is left to me to do this task, but I look forward to their support.
	The Minister will know that there will be precious few opportunities to introduce some of the Calman recommendations in the next few months. Parliamentary time is tight and we have here an ideal opportunity to ensure that one of the key proposals of the Calman commission is introduced. For the life of me, I cannot understand why there could possibly be any reluctance to support this modest but important amendment, which is in line with Labour, Conservative and Liberal party policy.
	I tried to frame the amendment as closely as possible to what was suggested in recommendation 4.21 of the Calman report. My amendment reads:
	The Minister for the Civil Service shall delegate the appointment and approval of senior civil servants to senior posts in the Scottish Executive to the Head of the Home Civil Service, acting on advice of the Civil Service Commission.
	The Calman commission's recommendation 4.21 states:
	The responsibility for appointing, or approving appointments of, senior civil servants to senior posts in the Scottish Government should be delegated by the Prime Minister to the Head of the Home Civil Service, acting on the advice of the UK Civil Service Commissioners.
	They are almost identical.
	I do not want the Minister to say that I am trying to twist or misinterpret what was suggested about her position in relation to the Calman commission. That is not my intention: I have been as helpful as I can be by framing the amendment so that it is as close as possible to the commission's original wording. The only difference that I can see is that this Government cannot get their head around the fact that Scotland has a Government, rather than an Executive.

Eleanor Laing: I am puzzled as to why the hon. Gentleman is supporting the Calman commission this evening, instead of putting forward the position of the Scottish National party.

Pete Wishart: I know that the hon. Lady listens to every word that I say, and I am saying that I am prepared to set our ideal position aside so that we can make progress. The amendment would be at least a start to transferring some decisions on the civil service from London to Edinburgh. I am hoping to enlist her support in getting it through, although the crucial difference between the Calman process and the Scottish Government's national conversation is that we trust the people of Scotland to make the choice. We are prepared to take our proposal to the Scottish people, but the hon. Lady rejects that. When the Conservatives come to contest the next election, they might find that there is a heavy price to pay in Scotland for their failure to allow the people there to have a choice.
	The amendment represents the agreed position of the Labour, Conservative and Liberal parties, all of which have the opportunity to support it this evening. What happens if they do not? That is a key question. Is Sir Kenneth wasting his time? Is he sitting in Glasgow university wondering what will happen to the rest of his recommendations? This evening, with this key piece of legislation, there is an opportunity for the House to enact one of his recommendations, but he will be observing our debate and wondering, What on earth is going to happen to the rest of them? What will parliamentarians in the Scottish Parliament who are keen to see progress made and more powers devolved make of their colleagues in Westminster rejecting this proposal?

Stewart Hosie: No Labour Members are even here. Where are they? Our party has a better turn-out.

Pete Wishart: My hon. Friend asks where the Labour Members are. Looking at the deserted Labour Back Benches, I am wondering the same thing. No Scottish Labour Member is present, with the honourable exception of the Parliamentary Private Secretary sitting behind the Minister.
	Where is the Scottish Secretary? I though that this was his big idea. The Calman commission was supposed the vehicle for looking at devolution 10 years on. Here is a chance for the right hon. Gentleman to get one of his key proposals through, but he is not even here.
	That is appalling, Sir Nicholas. I am sure that when you look at all the empty Benches, you are wondering what on earth Scottish Labour Members are doing. I am also sure that the people of Glasgow, North-East are looking at what is going on this evening. They will see that whereas my hon. Friends sitting next to me and I are ready to debate and consider an important recommendation for Scotland, not one Scottish Labour Member is present on the Government Back Benches. The people in Glasgow, North-East will be looking very carefully at who represents the Scottish interest best in this House.
	What happens if the amendment is rejected? I believe that it will mean that the work of Calman commission is not worth the paper that it is written on. That will be very closely observed-but in the spirit of my helpful contribution, I will make the Minister a deal. I am sure that she will stand up and say that the amendment is not suitable for this Bill, and so on. However, if she can give me a cast-iron commitment and guarantee that a specific piece of legislation will be introduced in the next few months to get this proposal through, I will not have to go through with the appalling prospect of embarrassing Labour Members by asking them to vote against their own measure. That is my contract with her this evening.
	I do not want to be so cruel- [ Interruption. ] My colleagues are egging me on, but I believe that I owe it to Labour Members to give them an opportunity to try to put this matter right. The Minister can do that on their behalf but, if she does not say what I want to hear, I will press the amendment to a vote.

Eleanor Laing: I thank the hon. Gentleman for giving way again, as I have a genuine question. He is right to point out that no Government Back Benchers are present to ask questions on behalf of those who are puzzled by the amendment, so in their absence I shall try to do so.
	I understand what the hon. Gentleman is saying about the Calman commission. I understand the conclusions of Sir Kenneth Calman and his colleagues, and I have some sympathy with them. However, it is difficult to see how the amendment will transfer the power to which the hon. Gentleman refers from London to Edinburgh. I understand that he is saying that the amendment is only a step in the right direction. It would take power away from institutions in London, but it does not say specifically that power will rest in Edinburgh.

Pete Wishart: The hon. Lady has obviously never looked at the amendment. It seeks to achieve the transfer of the appointment of senior civil servants from London to the home civil service in Edinburgh. It is the start of a process. That is the hon. Lady's position, too. It is what her party agreed in the Calman commission. It is her party's position, as well as the position of the Labour party and of the Liberals.
	I have heard from a sedentary position the assurance that the Liberals will support the amendment, and I thank them for that. It is now a matter for the Minister. She can either assure me without equivocation that she intends to introduce a separate piece of legislation to achieve the aim of the amendment, or we will have to go through the ridiculous, almost grotesque spectacle of Labour Members voting against their own policy. It is up to the Minister.

David Howarth: I am not sure whether I can speak on behalf of the old Liberal party, of which I used to be a member, but I can certainly speak on behalf of the Liberal Democrats. I would urge Liberal Democrat Members to support the amendment if it is pressed to a vote.
	As the hon. Gentleman said, the amendment does not represent the separation of the civil services which some in his party seek. It is simply a measure of further devolution politically-not by further devolving the power itself, but by removing a power from the UK Prime Minister. It seems a perfectly sensible suggestion to transfer power over senior appointments in Scotland from a politician-the UK Prime Minister-to the head of the home civil service for the United Kingdom, the Cabinet Secretary.
	Some people might think that that is a purely symbolic gesture, but it would provide some protection for the process of appointment to the civil service in Scotland, which does not exist now. Given the history of prime ministerial interference in senior civil service appointments that we suspect has been going on at United Kingdom level-at least under a previous Prime Minister-that seems an entirely sensible thing to do. It raises the question why the Bill retains the power of the Prime Minister, as Minister for the Civil Service, to interfere with senior appointments at United Kingdom level-an issue that seems to have disappeared from the Bill, in comparison with previous drafts. Perhaps that is the reason why the Government are nervous about the amendment.
	I come back to the point about devolution. It seems perfectly reasonable to have a different system even on that question in Scotland, compared with the rest of the United Kingdom. I do not think that threatens the unity of the civil service, and it provides a sensible way forward. Speaking as an outsider, I think that the Calman commission provides a sensible way forward for further devolution to Scotland, so I approve of the amendment and would vote for it if the Committee were to divide on it.

Tom Watson: I have the highest regard for the hon. Member for Perth and North Perthshire (Pete Wishart). His humility goes before him. I admire his talents-his musical talents more than his political talents. As he knows, I represent a midlands seat in England, but when I look from afar at the amendment, I begin to think that he is selling out. He might be selling Scotland down the river with the amendment. The trappings of office are getting to the Scottish National party. The amendment is a pathetic piece of symbolism. If he really stood up for Scotland-

Angus Robertson: It's your party policy.

Tom Watson: Hey, I am on the Back Benches. It might be my party policy but I can say what I want now. The hon. Member for Perth and North Perthshire is selling Scotland down the river with that amendment. It is a pathetic piece of symbolism to score points in a by-election. He has spoken eloquently, but the amendment would not fundamentally change the relationship between London and Edinburgh, and he knows it. I want to stand up for the people of Scotland and the voters in Glasgow, North-East, so I shall oppose the amendment if he presses it to a vote.

Angela Smith: First, I welcome the conversion of the hon. Member for Perth and North Perthshire (Pete Wishart) to the Calman commission. That will receive widespread support from Labour Members-even though there was no great support for the commission from the Scottish National party, which would not even take part in it. I listened to the hon. Gentleman carefully when he said that he was being helpful, and I wish that I could believe him.
	The provision in the hon. Gentleman's amendment was one of the recommendations in the Calman commission's report on Scottish devolution, and the Government said publicly that we were carefully considering our response to the report in the round, and that we would produce our response by the end of the year. The proposals from the Calman commission, which the SNP did not take part in, were wide-ranging and significant, and there is widespread agreement, including from Kenneth Calman himself. The proposals are being treated with due attention, and considerations are not just cherry-picked one after another. They have to be looked at in the round, and all issues must be considered.
	It was argued that there is almost no autonomy for Scottish Ministers, but it must be said that they, quite rightly, have a large degree of autonomy in their day-to-day management of the devolved Administration in Scotland. However, the hon. Gentleman also stated that he would withdraw his amendment if I guaranteed that legislation would be introduced in the next few weeks. If any Calman commission recommendations were taken forward, they would be achievable under the provisions of the Bill as it stands, and no legislative change would be necessary. It is important that the Government consider the Calman report in the round, rather than looking at one or two items and cherry-picking them.

Eleanor Laing: I have a genuine question about practicality. If the amendment were agreed to, would it pass power from London to Edinburgh, or would it pass power only from one London office to another London office? That is a genuine question.

Angela Smith: I shall wait for inspiration-but there does not seem to be any great transfer of power in the amendment at all. The right way to address the concerns is to have a proper response to the Calman commission in the round. If the amendment is pushed to a vote and Members vote against it, they will not be voting against Calman; they will be voting for a proper considered response to the whole report.

David Howarth: I should remind the Minister that we are in Committee, so we are allowed speak again in the same debate. She did not explain precisely how the ends that the hon. Member for Perth and North Perthshire (Pete Wishart) desires in moving the amendment can be achieved through the Bill as it stands. I would be very grateful if she were to put on the record exactly how they could be, because I can see no such power. However, she seems to be claiming that it exists.

Angela Smith: There are two points. First, the hon. Member for Epping Forest (Mrs. Laing) is quite right: there would be no transfer of power to Scotland; the power would remain with the Prime Minister. Secondly, I can assure the hon. Member for Cambridge (David Howarth) that the legislative power exists; no legislative change would be necessary for the provisions of the amendment to be introduced.

Pete Wishart: I have very much enjoyed this particularly illuminating debate. So that we understand the discussion, I should say that the amendment would take the power to appoint senior civil servants in Scotland out of the hands of the Prime Minister and put it into those of the head of the home civil service. It is a very modest measure. It is not pathetic, as the hon. Member for West Bromwich, East (Mr. Watson) says, because it would be unfair to describe the Labour party's position as pathetic, and I am not prepared to do that.

Tom Watson: The hon. Gentleman is turning into a real London luvvie, defending this amendment, which would hand no power to Scotland. He should be ashamed of himself, and apologise to his constituents and to his party.

Pete Wishart: I thank the hon. Gentleman for that useful intervention. The prospect of my becoming a London luvvie is probably several degrees removed from reality.
	The amendment is a modest measure, and I tabled it to try to be helpful. It is about being constructive and making gentle progress towards securing what we believe is a greater ambition for Scotland. I thought that by discussing the agreed position of the Labour party, the Conservative party and the Liberal party, we could start to move the traffic in the right direction.
	The Minister went on about some nonsense to do with our commitment to Calman. May I say to her-she is not listening, but I will say it anyway-that where there is agreement on Calman, for goodness' sake let us act on it? There are several parts of Calman that we have absolutely no problem whatsoever about implementing, such as its recommendations on the devolution of firearms legislation and on drink-driving. If the Unionist parties-the London-based parties-think that it is a good idea and we think that it is a good idea, let us do it; there should be no problem with that. But for some reason, Calman has been presented as an all-or-nothing package, so we cannot do the good things and leave aside some of the nuttier suggestions that he mucked about with at the edges. Where it is useful, where it is constructive, and where it takes things forward, let us get on and deal with it.
	The Minister's response has not been satisfactory, and that is disappointing and unfortunate. We are now going to see the ridiculous spectacle of Labour Members walking through the Lobby voting against their own position and their own proposals. I am very much looking forward to witnessing that.

Eleanor Laing: I have a lot of sympathy for what the hon. Member for Perth and North Perthshire (Pete Wishart) said, as I often do when we take part in the same debates. He has highlighted an important issue. However, as the Minister says, the whole Calman report has to be looked at as one entity, and it would be wrong to press a small part of its recommendations in the Bill. Having said that, I, like the hon. Gentleman, look forward to the Government's responding to Calman soon, so that we can get on with these matters, because we believe in power resting in Edinburgh where it should do so.

Question put, That the amendment be made.
	 The Committee divided: Ayes 55, Noes 286.

Question accordingly negatived.
	 Question proposed, That clause 3 stand part of the Bill.

David Heath: I want to ask the Minister a simple question that relates to an obvious omission from this part of the Bill. In the 2004 draft Civil Service Bill, there was an explicit statement in clause 4(4) that
	Nothing in this section confers...power to recruit, appoint, discipline or dismiss civil servants, or...any other power for the day to day management of civil servants.
	Ministers have the power to hire and fire civil servants, but that provision made it explicit that they should not do so. This Bill does not repeat that explicit assurance, but it should.
	The Public Administration Committee made that point in its response to the draft Constitutional Renewal Bill, when it said:
	Giving Ministers the general power to appoint and dismiss civil servants does not seem in keeping with the Government's commitment to a civil service recruited on merit and able to serve administrations of different political persuasions.
	I agree with that. The Joint Committee on the draft Bill said:
	While Ministers can legitimately be consulted about particular moves within the civil service, Ministers should not be involved in appointment or dismissal of individual civil servants without the express approval of the Prime Minister. We invite the Lord Chancellor to follow up on his offer to look again at the drafting...to reflect this.
	I do not agree with the Joint Committee, because I do not think that the Prime Minister should be able to give explicit approval either. I want clear protection for civil servants from this extraordinary power that Ministers have.
	The Minister may reply to my points by saying that the clauses on recruitment mean that Ministers cannot intervene except within the very narrow tramlines of the recruitment process that is set out, but I do not think that that is sufficient and I would like an explicit exclusion.
	If Members want a rationale for such an exclusion, we have been provided with one in the past few days, with the sacking of an independent scientific adviser. Although he was not a civil servant, the incident raises exactly the sort of issues that are relevant to this debate. Indeed, my colleagues tabled new clause 42, which addressed the point. It had the great advantage of topicality, but the great disadvantage of not being timely. Because the circumstances arose over the weekend, it could be tabled only yesterday and therefore could not be selected for today's debate. I shall not speak in detail about it, therefore, but it would have given protection to independent scientific advisers to do their job as independent scientists.
	However, I shall press the question with the Minister about why Ministers will not be expressly forbidden to hire and fire civil servants. That should be a basic principle that is enshrined in the Bill. Otherwise, there is the possibility of abuse and people being removed for political purposes. If we are to give proper protection to civil servants, we can do it only through a provision of the kind proposed.
	The Minister has been asked repeatedly, even during the debates on the first three clauses, to explain what has changed between the time of the draft Civil Service Bill in 2004 and the Bill before us today. I must say that the explanations given by her advisers have not always been convincing. I hope that, on this occasion, we will at least get some sort of explanation of why a provision that was felt necessary in 2004 is not felt necessary in 2009. In the absence of such an explanation, it is hard to give any credibility to the clause.

Eleanor Laing: The hon. Member for Somerton and Frome (Mr. Heath) has got his priorities a bit mixed up. It is touching that he wishes to protect civil servants, but I believe that it is the duty of the House to require the accountability of civil servants. That accountability is derived through ministerial accountability to Parliament. There has to be a chain of accountability, therefore, from civil servant to Minister to Parliament. That is what the Conservative party, in other circumstances, has proposed. In so far as the clause brings that about, to a certain extent, we support it. I am disappointed to see the hon. Gentleman get his priorities so mixed up. I hope that the Minister has not got her priorities mixed up.

David Howarth: Is the hon. Lady saying that any Government of whom she might be a member would think it appropriate for Ministers to hire and fire individual civil servants?

Eleanor Laing: Of course not; that is already protected. The Liberal Democrats should not be quite so touchy; my criticism of them does not mean that I am saying that everything that they have said is wrong. They ought to calm down. I am merely saying that the real issue is accountability. It is a pity that clause 3 does not go further in respect of the accountability of civil servants and Ministers to the House, which is then accountable to the people. That should be the principle on which we work.

Angela Smith: I listened with interest to the hon. Member for Somerton and Frome (Mr. Heath) talking about why his new clause was not selected. I put it to him, however, that it might have had the advantage of topicality, but it had the disadvantage of not being relevant to the civil service-it was not about civil servants.
	The Government made it clear in their response to the Joint Committee that the provisions in the Bill do not alter the current power to manage individual civil servants. That will, as now, continue to be delegated to the head of the civil service and to permanent heads of Departments.

David Howarth: Will the Minister give way?

Angela Smith: I will do so only if the hon. Gentleman promises to make a sensible point.

David Howarth: I am not sure whether the Minister's point was sensible. She said that independent scientific advisers are not civil servants. How does she know?

Angela Smith: Because they do not have a civil servant contract. They have not signed the terms and conditions of a civil servant. They have not signed up to the ministerial code. The case to which the hon. Member for Somerton and Frome referred did not involve a civil servant.
	I understand the hon. Gentlemen's concerns, but the provisions in the Bill do not signal a change in ministerial involvement in individual appointments. The power to appoint is constrained by subsequent clauses that require recruitment to the civil service to be based on merit, following fair and open competition. That is regulated by independent civil service commissioners in accordance with recruitment principles. Civil servants are protected by statutory legal protection and employment laws. It is right that the power to manage remains with the Minister for the Civil Service and the Secretary of State, who are, as the hon. Member for Epping Forest (Mrs. Laing) made clear, ultimately accountable to Parliament for the management of the civil and diplomatic services respectively, including for the setting of terms and conditions overall.
	The civil service code makes it clear that the civil service
	supports the Government of the day in developing and implementing its policies, and in delivering public services.
	The code also makes the very point that I have just made, which is that civil servants
	are accountable to Ministers, who in turn are accountable to Parliament.
	There appears to be some misunderstanding on the Liberal Democrat Benches about the approach of the Bill. The Bill has taken a principles-based approach. None of the principles has changed since 2004, and it has not been felt necessary to list specific activities or specific civil servants, as the hon. Member for Somerton and Frome would seek to do. With that explanation, I hope that the clause will stand part of the Bill.

David Heath: I have now heard two speakers, from the Conservative Front Bench and from the Government Front Bench, who are muddled in their thinking and completely misunderstand the basic process that the Bill is intended to elucidate. The hon. Member for Epping Forest (Mrs. Laing) went off on a mini-tirade about how we were completely wrong to question whether Ministers should hire and fire civil servants. When my hon. Friend the Member for Cambridge (David Howarth) put it to her that she might support the hiring and firing of civil servants by Ministers, she said that of course she did not and that that was outrageous. We really do expect some coherence of thought and some logic in the contributions made in this Committee, especially from the Front Bench of a party that aspires to government.

Eleanor Laing: The hon. Gentleman has completely misrepresented what I said. He is so touchy that the slightest criticism appears to send him into a temper. I do not want to take any more of the Committee's time on this matter, but he must not misrepresent what I said.

David Heath: I am indeed in a temper: a good temper, as I always am. When the  Official Report is studied, it will be clear what the hon. Lady said and how little it resembles what she apparently means.
	When it comes to the Minister, however, I shall ask the question again-obviously I am not going to get a response, so this is the last time that I will ask it. Why was something right just in 2004? It was not right because I tabled it as an amendment or because the Joint Committee said that it wanted it, but something that the Government put down as a crucial element, using the following words, which I have already quoted:
	Nothing in this section confers...power to recruit, appoint, discipline or dismiss civil servants.
	One would have thought that that was a key protection, but now the Minister says, It's completely unnecessary: it's understood; it's tacit. We no longer need to say that. What has changed?
	Why was that necessary then, probably on the advice of some of the same civil servants who now advise her that it is not necessary? I do not think it unreasonable for the Committee to be given an explanation about that. Simply to assert that something that the Government said was necessary is now not necessary is an insufficient argument. It is very regrettable that we are proceeding with the Bill on the basis of assertion and counter-assertion, rather than explanation and consideration of the underlying principles.

Angela Smith: It is with some regret that I rise again to speak on this issue, but the hon. Gentleman misunderstands the whole basis of the Bill. He asks what has changed since 2004. In principle, nothing has changed. The points that he made are there: a principles-based approach is being taken. He says that there is nothing-

David Howarth: Will the Minister give way?

Angela Smith: If I may finish the point, it might help the hon. Gentleman to listen before jumping in.
	The Joint Committee heard the same arguments. The provisions do not alter the current position that the power to manage individual civil servants can, as now, be delegated to the head of the civil service. That was good enough for the Joint Committee, which debated and engaged with Ministers on the issue, and which is content with the response. It is only the hon. Member for Somerton and Frome (Mr. Heath) who fails to understand the difference.

David Howarth: The Minister seems to be saying that this is now a principles-based Bill, as opposed to a rules-based Bill, but then the question is: what principle did the previous rule represent? The principle that the previous rule represented, it seems to me, was the principle that Ministers should respect the impartiality of the civil service. However, that principle is not in the Bill, and we have had to design a new clause to try to insert it. If that is not the principle that was involved, what principle was involved?

Angela Smith: I sometimes wonder whether the hon. Gentleman is serious about the points that he puts forward. The impartiality of civil servants is in the legislation; it is quite clear-

David Howarth: But not Ministers.

Angela Smith: Ministers' respecting that impartiality is implicit in the Bill. If Ministers are putting forward a Bill to the House and that Bill includes the impartiality of civil servants-

Francis Maude: rose-

Angela Smith: I give way in exasperation to the right hon. Gentleman.

Francis Maude: I am grateful to the Minister for confirming that the Bill intends to make no change to the current arrangements, which have persisted reasonably successfully for a long time without serious challenge. Will she also confirm that the protection for civil servants against ministerial political interference in recruitment, dismissal or promotion lies with the Civil Service Commission, as it has done for many years before this Bill eventually came along, and that that protection will be given greater entrenchment by the Bill?

Angela Smith: It does indeed; that is one aspect of it. It is also entrenched in the ministerial code, which ensures that Ministers should respect the impartiality of civil servants. I think that that is quite clear, but I suspect that the hon. Gentlemen on the Liberal Democrat Benches might wish to make that point, as they are not fully conversant with the legislation.
	 Question put and agreed to.
	 Clause 3 accordingly ordered to stand part of the Bill.
	 Clause 4 ordered to stand part of the Bill.

Clause 5
	  
	Civil service code

Question proposed, That the clause stand part of the Bill.

David Howarth: Clause 5 is about the civil service code, to which the Minister has just referred. She also claimed that the ministerial code was entrenched in the Bill. Will she explain which clause mentions it? It is not defined anywhere in the definitions section; I think that she must have misspoken.

Angela Smith: No, I did not say that the ministerial code was in the Bill. I said that the ministerial code enshrines the impartiality of civil servants, and that Ministers respected that impartiality.

David Howarth: I must therefore conclude that the ministerial code will not be statutory and will not have the same degree of protection that the civil service code will have, as it is the purpose of this clause to entrench that protection in law. The Minister must recognise that it is a deliberate policy decision by the Government not to give statutory force to the ministerial code because they do not want the courts to interfere with Ministers. That is fine, but I do not think she should pretend that the situation is otherwise.

Angela Smith: Any Minister who tried not to adhere to the principles of the ministerial code would find that they had to deal with the normal processes of government, and that they might not be a Minister for much longer.

Eleanor Laing: I would like to ask the Minister why it is deemed necessary to specify, in clause 5(2), that
	the Minister may publish separate codes of conduct covering civil servants who serve the Scottish Executive or the Welsh Assembly Government.
	Given that codes of conduct are about matters of principle, why should those principles be different for civil servants who serve the Scottish Executive or the Welsh Assembly? I appreciate that the policies and procedures are different, as indeed they should be in a devolved situation, but why should the codes of conduct be different?

Angela Smith: The codes might not necessarily be different, but they may be different if, after consultation with the devolved Governments, different issues needed to be addressed. That is something that the Government would discuss with them. So they might address different circumstances from time to time, but they do not have to.
	 Question put and agreed to.
	 Clause 5 accordingly ordered to stand part of the Bill.
	 Clause 6 ordered to stand part of the Bill.

Clause 7
	  
	Minimum requirements for civil service and diplomatic service codes

Francis Maude: I beg to move amendment 50, page 4, line 29, at end insert
	'with a fiduciary responsibility to spend taxpayers' money responsibly.'.
	The civil service code and its entrenchment in statute is the central part of the civil service portion of the Bill. It is extremely important; we strongly support it. In a way, clause 7, which sets out some minimum requirements for that code, is the heart of this part of the Bill. We strongly support the values promoted here-integrity, honesty, objectivity and political impartiality. I am conscious that because the provision is so important, there is a danger of wanting constantly to add bells and whistles as if it were a Christmas tree, but we believe that a further minimum requirement should be added.
	As the Conservative party outlined in a paper, It's Your Money, published in February this year, a fiduciary responsibility should be placed on civil servants. The term generally means that someone trusted with the assets, wealth or well-being of a third party has a responsibility to manage them in the best interests of that third party. We believe that that is essentially at the heart of much of what the civil service does, and we would like to see it enshrined in the code.
	We believe that all employees in the public sector should abide by the principles of fiduciary responsibility, but the proposed code does not cover the full spectrum of people employed by the state. We discussed in the context of clause 1 the lack of a definition about who is covered. Many contract workers, agency temporary workers or employees of non-departmental public bodies are not covered by the civil service code. We propose that a separate code should be established for those employees, stressing the same fiduciary responsibility.
	I stress that we do not propose this fiduciary responsibility in any hostile spirit to civil servants; rather, I would say, the reverse. I believe that this provision would provide protection for civil servants, especially if it were backed with the amendments and new clauses grouped together on clause 9, which would place an obligation on Ministers-building on a point made previously-to respect the civil service code. Of course, the ministerial code already does that, although it is not, as the hon. Member for Cambridge (David Howarth) rightly pointed out, entrenched in statute, but nor would the Bill achieve that.
	Ministers have a duty to respect the civil service; they should respect not only its code of values, but its role in providing advice. Of course Ministers are not obliged to accept the advice of their civil servants, but they should surely always seek it, listen to it and make judgments after assessing it. When public money is spent badly or inefficiently, it is very often the consequence not of civil servants being lax, careless, inefficient or hopeless, but of them being forced to do things by unwise ministerial decision, often in the face of civil servants' advice.
	I cited on Second Reading the example of the introduction of tax credits. It is now well attested that the then Chancellor, now the Prime Minister, was strongly advised by civil servants in both the Revenue and the Treasury that the way he proposed to proceed with tax credits would introduce serious risk of fraud and error, all of which came about. The advice was ignored and the result was a grave misuse of public money, not to mention the enormous human misery caused to hundreds of thousands of low-paid, hard-working people who found themselves required to pay back money that they had received in good faith. Those people thought that they were doing the right thing and obeying the law. The point about incorporating this fiduciary responsibility into the code of conduct is that if in those circumstances a Minister tells civil servants that they must go ahead and implement the policy regardless, against their own advice, there is at least some protection for those civil servants.

Gordon Prentice: Is that not already covered by the designation of permanent secretaries as accounting officers for the Departments for which they are responsible?

Francis Maude: There is no harm in making that designation more explicit, and giving it some teeth by entrenching it in statute.
	There is, of course, already a provision enabling a permanent secretary who feels that he or she is being required to do something that is not in the interests of the taxpayer to put in writing to the Secretary of State a request that he or she-the permanent secretary-be directed to implement the policy, but to my knowledge that has happened on only eight occasions in the past 12 years. It did not happen when tax credits were introduced. Arguably it should have, because it is understood that robust advice was given to the Chancellor to which he refused to listen. There is a strong case for saying that, given the circumstances, the chairman of the Revenue and the permanent secretary to the Treasury should have put in writing to the Chancellor that they needed to be directed, because their advice was that such action would be very harmful.
	In the circumstances in which this country now finds itself, with a ballooning public debt and a budget deficit that seems to be out of control, incredible care with taxpayers' money will be of central importance in the years that lie ahead. It seems to us really important that protection for civil servants against being required to do things that are not in the interests of taxpayers should be entrenched. We think that Ministers should have a statutory obligation to respect the impartiality of civil servants. We have a good deal of sympathy with a Liberal Democrat new clause, which we hope will be reached later. In the meantime, however, this amendment-which reflects the central importance for the whole Executive of respecting and acting in the interests of taxpayers-would provide an extremely valuable additional discipline. As I have said, it would provide protection for civil servants against being bullied into implementing policies that were not in the interests of the taxpayer.

David Howarth: I sympathise very much with the intention behind the amendment. I do not think that it would do any harm to include a responsibility in the code and the Bill to ensure that public money is spent wisely. My only worry relates to the use of the word fiduciary, which gives the impression that the relationship between civil servant and Government is similar to the relationship that used to exist between local councillors and their authorities in the days of surcharging. The word fiduciary always cropped up in surcharging cases.
	Given the vast amounts of public money that go through Departments, it would be entirely wrong to open up civil servants to the possibility of having to repay perhaps billions of pounds to the public. I do not think that that was the intention of the right hon. Gentleman, but perhaps he should rethink the wording of the amendment on a future occasion.

Tony Wright: This Bill has been through so many previous incarnations that it is sometimes difficult to keep up with it. In one of its incarnations, there was a list of various duties that civil servants would be obliged to perform, including the duty
	to discharge public functions reasonably and according to law
	and another duty to do with standards of administration. It seems to me that there are two possible logical positions: to set out the duties of civil servants, or to take the Bill's approach and simply to say what are the core values. There is not a case, however, for taking one duty-in this instance, fiduciary responsibility-and seeking to insert it into the Bill without addressing all the other ones. There must be all or nothing, and this is just a gesture in the middle.

Angela Smith: I have listened carefully to hon. Members' comments, and it might help if I point out the following. Clause 7 sets out the minimum requirements for civil service and diplomatic service codes of conduct. Codes of conduct must require civil servants in the UK, Scotland or Wales to serve the Administration of the day of whatever political complexion, and must contain an obligation on civil servants to carry out their duties in accordance with the core civil service values as set out in the Bill: integrity, honesty, objectivity and impartiality.
	Amendment 50 would add the
	fiduciary responsibility to spend taxpayers' money responsibly
	to the minimum requirements of the code as set out in the Bill. The legislation sets out the core civil service values that are essential to maintaining an impartial civil service. The civil service code gives more details on the kinds of behaviour expected from civil servants in clear and accessible language. It sets out the details of the core values under each of their headings. Under Honesty it says that civil servants must
	use resources only for the authorised public purposes for which they are provided.
	Under Objectivity it says they must
	provide information and advice, including advice to Ministers, on the basis of the evidence, and accurately present the options and facts.
	Under Integrity it says they must
	comply with the law and uphold the administration of justice.
	The requirement on the use of public money is set out explicitly in the code under the core value of Integrity, where it says civil servants must
	make sure public money and other resources are used properly and efficiently.
	I think that covers the matter.
	I understand why the right hon. Member for Horsham (Mr. Maude) thought this particular duty was so important that it should be added to the Bill, but I think my hon. Friend the hon. Member for Cannock Chase (Dr. Wright) is right-although he does not agree with me entirely-that there must be either a principles-based approach or a more detailed approach. Adding the details of the principles of one aspect of the civil service code to the Bill would undermine the others in the code.
	My hon. Friend the Member for Pendle (Mr. Prentice) made a point about accounting officers. The accounting officer has a personal responsibility for the propriety of the spending of all the money for which he or she is responsible. That is set out in various codes.
	I understand the point made by the right hon. Member for Horsham, and it is valid, but his proposal is unnecessary because of the way in which the Bill is set out and the information that is contained in the code.

Francis Maude: I have listened to the comments of the Minister and others. We think that this duty is an important part of the obligations on civil servants and that a statement of that would give additional protection to civil servants, but there are other ways of addressing the issue and we should look into them further. I beg to ask leave to withdraw the amendment.
	 Amendment, by leave, withdrawn.
	 Clause 7 ordered to stand part of the Bill.

Clause 8
	  
	Special Advisers code

Kelvin Hopkins: I beg to move amendment 79, page 4, line 33, leave out 'special' and insert 'Ministerial'.

Michael Lord: With this it will be convenient to discuss the following: Amendment 80, page 4, line 38, leave out 'special' and insert 'Ministerial'.
	Amendment 53, page 4, line 39, at end insert-
	'(3A) The special advisers code must contain provision preventing a special adviser from-
	(a) authorising the expenditure of any public funds;
	(b) exercising any power given by or under an Act of Parliament or an Act of the Scottish Parliament; and
	(c) exercising any management function in relation to the civil service.'.
	Amendment 81, page 5, line 1, leave out 'special' and insert 'Ministerial'.
	Amendment 82, page 5, line 3, leave out 'special' and insert 'Ministerial'.
	Amendment 83, page 5, line 5, leave out 'special' and insert 'Ministerial'.
	Amendment 84, page 5, line 7, leave out 'special' and insert 'Ministerial'.
	Amendment 85, page 5, line 8, leave out 'special' and insert 'Ministerial'.
	Amendment 86, in clause 15, page 7, line 38, leave out 'special' and insert 'Ministerial'.
	Amendment 22, page 8, line 14, at end insert-
	'(e) those terms and conditions prohibit the special adviser from undertaking restricted duties.'.
	Amendment 23, page 8, line 26, at end insert-
	'(d) those terms and conditions prohibit the special adviser from undertaking restricted duties.'.
	Amendment 24, page 8, line 38, at end insert-
	'(d) those terms and conditions prohibit the special adviser from undertaking restricted duties.'.
	Amendment 87, page 8, line 38, at end insert-
	'(1A) A Ministerial adviser appointed to give party political advice to Ministers or to undertake other activities otherwise inappropriate to a civil servant is to be termed a political adviser.
	(1B) A Ministerial adviser appointed for his professional experience to assist with specific projects or problems is to be termed a specialist adviser.
	(1C) All Ministerial advisers must act only in the advisory and not an executive capacity.'.
	Amendment 25, page 8, line 45, at end insert-
	'(3) The following are restricted duties-
	(a) authorising the expenditure of public funds;
	(b) exercising any power given by or under an Act of Parliament or an Act of the Scottish Parliament;
	(c) exercising any function relating to the appraisal, reward, promotion or disciplining of civil servants in any part of the civil service (including a part of the civil service to which this Act does not apply).'.
	New clause 15- Cap on number of special advisers -
	'(1) The number of special advisers appointed by Her Majesty's Government in the United Kingdom shall be limited according to the procedure laid out in subsections (3) to (6) of this section.
	(2) Until the procedure laid out in this section has been completed, no new special advisers may be appointed.
	(3) A Minister of the Crown must lay before parliament an order setting a limit for the total number of special advisers at any one time in the service of Her Majesty's Government in the United Kingdom.
	(4) The order may make for provision for different Ministers of the Crown to be allowed to appoint different numbers of special advisers.
	(5) The order may make provision, within the limit referred to in subsection (3), for there to be a limit to the number of special advisers who may be paid from public funds at any one time.
	(6) An order under this section comes into force when resolutions approving it have been passed by both Houses of Parliament.'.

Kelvin Hopkins: I say at the outset that I do not intend to press my amendments to a vote. One good reason is that, unfortunately, there are some slight technical errors. However, they are important amendments and I hope that my Front-Bench colleagues will at least consider incorporating their spirit, and even some of their wording, into the Bill at a later stage. They are about special advisers and seek to replace the term special with ministerial, so that we know precisely to whom the advisers are addressing their advice. It is a more accurate word and it would clarify the role of special advisers in future if they were called ministerial advisers.
	The Public Administration Committee, of which I am delighted to be a member, has discussed the role of special advisers at some length. Perhaps other Members have also discussed this issue during the debate, but there is a history to special advisers with which I have some familiarity. In the 1970s, I knew Tony Benn and his special advisers. However, the famous Francis Cripps and Frances Morrell operated strictly as his political advisers; they did not have a role in advising or instructing civil servants. What they did was useful and legitimate, although it did not please the civil servants at the time. Tony Benn's habit was to speak first thing in the morning to his personal political advisers and then later to the civil servants, so that he was well prepared for debating with them later in the day. That was seen then by the civil servants as untoward.
	However, under Tony Blair the power of special advisers went way beyond that; they took on a much more powerful role. They were effectively directing civil servants, acting as an Executive layer between Ministers and civil servants. This was something new, and it looked as though it was politicising the civil service in an unacceptable way. I was critical of that at the time, and I think we have rowed back from that arrangement to some extent.
	At the time, however, things went even further than that. Some of the special advisers in Downing street were actually giving instructions over the heads of Ministers. At least two former senior Ministers are on record as complaining that their role was being marginalised. They were being kept out of the picture because policy was being passed from Downing street direct to the civil servants by special advisers, almost making the Ministers irrelevant. I am glad to say that that has changed.

Peter Bottomley: That was 12 years ago. At the time, what was the proper way for people to raise that issue and say that the situation was either ineffective or improper, or both?

Kelvin Hopkins: Well, it concerned me at the time. I have been a member of the Public Administration Committee for seven years, and we have discussed these matters on a number of occasions. I have made very strong criticisms of that mode of operating, which changed the nature of our constitution and the relationship between Ministers and the civil service. It was a great mistake. I have used stronger language than that many times, which I will not use now-my hon. Friends who are also members of the Committee have heard me use it-when talking about authoritarian regimes and the techniques they use to exert political control at every level. However, to an extent, we have rowed back from that position, which I very much welcome.
	I want to divide the role of ministerial adviser again. As my amendments point out, ministerial advisers come in two types: specialist advisers, who are experts who can give advice on technical matters that will help a Minister to do his job better; and political advisers or hacks-the sort of job that I might have done in a different regime. Long before I came into this place, I worked as a political adviser within the trade union movement. I used to use every opportunity to twist and turn politics as I wanted; that is what political advisers do. They act as advisers to Ministers-to one side; they do not instruct civil servants. That is why we want to use the term ministerial adviser. Such people give advice to Ministers-they do not act as civil servants-and they are divided into those two categories.
	If I may say this, it is a good day to bury special advisers, to coin a phrase. We should restore the proper role of the civil service as independent, impartial, neutral and equally able to serve Governments of all persuasions. Also, I hope that within the civil service there will be a range of views, so that good advice can come from all sides-in fact, from different sides of the argument-within the service itself. That is how it operated in the past and that is how it should operate again.
	These amendments would restore the proper status of Ministers, whose role has been played down. The Cabinet has not been the power it was in the past. I would like to see Cabinet government genuinely restored, so that politics is really debated and thrashed out at Cabinet level, and does not just come down from the political advisers surrounding a Prime Minister-any Prime Minister.

Barry Sheerman: My hon. Friend and I share an interest in that history. When did we have something that he would describe as functioning Cabinet government? During what period was that?

Kelvin Hopkins: I do not wish to speak for too long, although I thank my hon. Friend for his intervention. This issue has been drawn to our attention by some former heads of the civil service who have been before the Select Committee. They reminded us that back in the days of the Wilson Governments, and perhaps those of the Callaghan Governments, there was a remarkable range of views within Cabinet. It stretched from Tony Benn and Barbara Castle, on one side, to Roy Jenkins and Shirley Williams, on the other, with several others in between. Within such Cabinets a real debate on policy took place, representing a spectrum of opinion. I am sure that the same was true of the Conservative party in times gone by, but our party certainly had genuine debate in Cabinet.
	It has also been pointed out that in times past the Cabinet would, typically, see some 200 policy papers a year-that is four a week, on average. Cabinet would debate those papers and reach some kind of consensus on them. I understand that in one of the more recent years, two policy papers went to the Cabinet. Considering two papers compared with 200 represents a change. I like to think that we should have a genuine debate in Cabinet, with strands of opinion, whichever party is in power-that should certainly happen when my party is in power. Those strands should represent the broad range of opinion within the large parties in our, essentially, two-party system-I apologise to the Liberal Democrats.
	That form of government was better than what we have had in more recent years-we might have avoided some mistakes, on all sides, had we had it. Special advisers should be replaced by ministerial advisers; we should have advisers giving advice to Ministers, not giving orders to civil servants.

The Second Deputy Chairman: May I just advise the Committee that it would seem sensible to take clause 15 stand part with this group of amendments? I have received representations about that and, as it is closely related, it would seem a sensible thing to do.

Eleanor Laing: It is pleasure to agree with almost everything that the hon. Member for Luton, North (Kelvin Hopkins) has just said.  [Interruption.] I hope that I am not doing him any harm in doing so. It is sad that the idea of the special adviser was first invented to assist Ministers and civil servants, so that such a person could play a hybrid role between the civil servant and the political office and political duties of the Minister.
	I do not think that this is declaring an interest, but I should say that I was a special adviser from 1990 to 1994. I recall very well the mostly unwritten code that we observed carefully. There was no question in those days of special advisers telling civil servants what to do. I know that the Lord Chancellor would agree with my comments-were he in the Chamber-and those of the hon. Member for Luton, North, because he was one of the first special advisers when he worked for the then Mrs. Barbara Castle. He undertook that position with the same distinction that he has shown since, and there was no doubt whatsoever as to what special advisers did.
	What is sad is the fact that, as the hon. Member for Luton, North described, the Government decided in 1997 to change the role of special advisers and almost overnight increased their number from 38 to 70 and more. More importantly, they changed their role and allowed special advisers to give instructions to civil servants, thereby undermining the position of civil servants. It is a pity that we cannot have a full debate on that this evening. We have only five minutes left and I shall curtail my remarks so that others will have an opportunity to speak, but I would have liked a full debate on that very issue. The fact that I cannot demonstrates that what my hon. and learned Friend the Member for Beaconsfield (Mr. Grieve) said when we debated the programme motion earlier this evening has proven to be totally correct. We could have gone on debating this tomorrow, because it is a very important matter.

David Howarth: rose-

Eleanor Laing: Before the hon. Member for Cambridge (David Howarth) makes his speech-and I shall give way to him in a second-may I say that I entirely agree with his amendments 22 to 25, on restricted duties?

David Howarth: I thank the hon. Lady for giving way. In fact, I was simply going to ask her whether she would support amendment 22 in the Lobby. It lays down the principle that she was talking about, which is that civil servants should not be instructed by special advisers for precisely the reasons that she gave and because it undermines the proper relationship between political appointees and the civil service. If she is of that opinion, I would like to test the opinion of the Committee on that amendment.

Eleanor Laing: I understand what the hon. Gentleman is saying. I do not think that it is necessary for the matter to be tested in the Lobby, but in principle I agree entirely with what he has to say.
	It is sad that the once noble role of special adviser-a person who served the civil service, Ministers, Parliament and therefore the people very well-has been so badly undermined by this Government over the past 12 years. I note that the Minister disagrees, but I hope that she will tell us right now that that balance will be redressed so that special advisers can go back to being proper special advisers again.

Tony Wright: I shall be extremely brief. It is unfortunate-in fact, that is hardly the word-that we have reached a part of the Bill that has some real meat in it and there is simply no time to discuss it. I hope that the Government will say how we can deal with the rest of the Bill, because at the moment the Committee will be unable to do so. Over the years, we have had endless arguments about special advisers, and we do not need to repeat them now. Let us hope that we have got it out of our system, but surely we must agree that we have to know what special advisers can and cannot do. In a Bill that sets down the core values of our system of our government, we need to say on the face of it what special advisers can and cannot do. Surely we have to test the will of the Committee on that.

David Howarth: I agree entirely with the hon. Member for Cannock Chase (Dr. Wright) and I think that the way to test that opinion is to press amendment 22 to a vote, so I shall ask you, Sir Michael, if we can do that in due course.
	I should also mention very briefly new clause 15, which would at least require the Government to say what the limits on the numbers of special advisers should be. At the moment the Bill, as drafted, would allow thousands of special advisers to be appointed, which would entirely undermine the senior civil service and introduce an entirely different system of government.

Angela Smith: I am grateful to hon. Members for keeping their comments short so that I have time to respond. First, on the points made by my hon. Friend the Member for Luton, North (Kelvin Hopkins), I have every sympathy with what he is trying to achieve but think that his amendments achieve the opposite, as they blur the line. The term special advisers is understood. I take the same view as the hon. Member for Epping Forest (Mrs. Laing); it is a noble profession that allows political support and advice to be given to Ministers while maintaining the integrity and impartiality of civil servants. I hope that my hon. Friend the Member for Luton, North will withdraw his amendment. I have every sympathy with his intention, but I do not think that his amendments will achieve what he wants.
	In response to my hon. Friend the Member for Cannock Chase (Dr. Wright), may I say that I think that there is a lot of force to his point about the need for us to be clear about what special advisers can and cannot do? He has already mentioned the debate that has been had and it is widely agreed that Ministers need advice and assistance. That is an important role to fulfil, and the first act of the Prime Minister in 2007 was to remove the position-
	 Debate  interrupted (Programme Order, this day).
	 The Chairman put forthwith the Question  already proposed from the Chair  (Standing Order No. 83D) , That the amendment be made .
	 Amendment 79 negatived.
	 The Chairman then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83D).
	 Amendment made: 36, page 4, line 35, leave out subsections (2) to (7) and insert-
	'(2) For this purpose, the Minister may publish separate codes of conduct covering special advisers who serve the Scottish Executive or the Welsh Assembly Government.
	(3) Before publishing a code (or any revision of a code) under subsection (2), the Minister must consult the First Minister for Scotland or the First Minister for Wales (as the case may be).
	(4) In this Chapter special advisers code means a code of conduct published under this section as it is in force for the time being.
	(5) The Minister for the Civil Service must lay any special advisers code before Parliament.
	(6) The First Minister for Scotland must lay before the Scottish Parliament any special advisers code under subsection (2) that covers special advisers who serve the Scottish Executive.
	(7) The First Minister for Wales must lay before the National Assembly for Wales any special advisers code under subsection (2) that covers special advisers who serve the Welsh Assembly Government.
	(8) A special advisers code forms part of the terms and conditions of service of any special adviser covered by the code.'.-( Mary Creagh. )
	 Clause 8, as amended, ordered to stand part of the Bill.
	 Clauses 9 to 14 ordered to stand part of the Bill.

Clause 15
	  
	Definition of Special Adviser

Amendments made: 37, page 8, line 7, leave out '8(7)' and insert '8(8)'.
	38, page 8, line 22, leave out '8(7)' and insert '8(8)'.
	39, page 8, line 35, leave out '8(7)' and insert '8(8)'.- (Mary Creagh.)
	 Clause 15, as amended, ordered to stand part of the Bill.
	 Clauses 16 and 17 ordered to stand part of the Bill.

Clause 18
	  
	Definitions etc

Amendment made: 40, page 9, line 38, leave out '8(3)' and insert '8(4)'.- (Mary Creagh.)
	 Clause 18, as amended, ordered to stand part of the Bill.
	 Clause 19 ordered to stand part of the Bill.
	 Schedule 2 agreed to.
	 Clause 20 ordered to stand part of the Bill.

New Clause 9
	  
	Crown employment: removal of existing nationality requirements

'(1) Section 3 of the Act of Settlement (which, subject to exceptions, prevents persons born outside the United Kingdom from holding certain offices) does not prevent any person from being employed or holding office in a civil capacity under the Crown.
	(2) In the Aliens Restriction (Amendment) Act 1919 (c. 92), omit section 6 (which, subject to exceptions, prevents the appointment of aliens to posts in the Civil Service).'.- (Mark Tami.)
	 Brought up, and added to the Bill.

New Clause 10
	  
	Crown employment: power to impose new nationality requirements

'(1) Rules may be made imposing requirements as to nationality which must be satisfied by a person employed or holding office in a civil capacity under the Crown in a reserved post.
	(2) A post is a reserved post if-
	(a) it is a post in any of the security and intelligence services, or
	(b) it is within subsection (3) or (4), and a Minister of the Crown has determined that it is necessary for requirements as to nationality to be satisfied in relation to the post.
	(3) The posts within this subsection are-
	(a) posts in Her Majesty's Diplomatic Service and posts in the Foreign and Commonwealth Office, and
	(b) posts in the Defence Intelligence Staff.
	(4) The posts within this subsection are posts whose functions are concerned with-
	(a) access to intelligence information received directly or indirectly from any of the security and intelligence services,
	(b) access to other information which, if disclosed without authority or otherwise misused, might damage the interests of national security,
	(c) access to other information which, if disclosed without authority or otherwise misused, might be prejudicial to the interests of the United Kingdom or the safety of its citizens, or
	(d) border control or decisions about immigration.
	(5) A determination under subsection (2)(b) may relate to a particular post or posts, or to posts falling within a description specified in the determination.
	(6) In this section the security and intelligence services means-
	(a) the Security Service,
	(b) the Secret Intelligence Service, and
	(c) the Government Communications Headquarters.
	(7) The rules may also-
	(a) impose requirements as to nationality which must be satisfied in the case of persons connected with a person who must satisfy requirements imposed under subsection (1), and
	(b) provide that any requirement imposed under paragraph (a) may be treated as satisfied if a connected person has or had substantial ties with the United Kingdom.
	(8) For the purposes of this section the following are connected with a person-
	(a) any parent or deceased parent of the person,
	(b) any spouse or civil partner of the person,
	(c) any person living together with the person as if they were spouses or civil partners, or
	(d) any parent of a person within paragraph (b) or (c).
	(9) The rules are to be made by a Minister of the Crown.
	(10) The rules may include provision-
	(a) exempting persons of a description specified in the rules (and persons connected with them) who were first employed, or first held office, in the post in question before a specified date, and
	(b) allowing the granting of exemptions by the appropriate person.
	(11) In subsection (10)(b) the appropriate person means-
	(a) in the case of posts in the Security Service, the Director-General of the Security Service or a person nominated by the Director-General of the Security Service,
	(b) in the case of posts in the Secret Intelligence Service, the Chief of the Secret Intelligence Service or a person nominated by the Chief of the Secret Intelligence Service,
	(c) in the case of posts in the Government Communications Headquarters, the Director of the Government Communications Headquarters or a person nominated by the Director of the Government Communications Headquarters, and
	(d) otherwise, a Minister of the Crown.
	(12) The references in-
	(a) section 75(5)(b) of the Race Relations Act 1976 (c. 74) (rules relating to nationality etc. of persons employed in service of Crown), and
	(b) Article 71(5)(b) of the Race Relations (Northern Ireland) Order 1997 (S.I. 1997/869 (N.I. 6)) (corresponding provision for Northern Ireland),
	to the implementation of rules include the grant of (or refusal to grant) exemptions under subsection (10)(b).
	(13) The power of a Minister of the Crown to make rules under this section is exercisable by statutory instrument.
	(14) A statutory instrument containing rules under this section is subject to annulment in pursuance of a resolution of either House of Parliament.
	(15) Nothing in this section limits any power to impose a requirement which is not a requirement as to nationality even if the ability of a person to satisfy the requirement may be affected by the nationality of the person or any other person.'.- (Mark Tami.)
	 Brought up, and added to the Bill.

New Clause 11
	  
	Crown employment: repeals and revocations

'The Schedule [Crown employment: repeals and revocations] has effect.'.- (Mark Tami.)
	 Brought up, and added to the Bill.

New Clause 33
	  
	Civil Service annual report

'(1) The Minister for the Civil Service must publish and lay before Parliament an annual report on the functioning of the civil service of the state.
	(2) The Minister for the Civil Service may publish separate reports covering civil servants who serve the Scottish Executive or the Welsh Assembly. Before publishing these separate reports the Minister must consult the First Minister for Scotland or the First Minister for Wales (as the case may be).
	(3) Such a report must include but is not limited to-
	(a) details on the numbers of civil servants by each government department and agency;
	(b) the costs of civil servants by each government department and agency;
	(c) a comprehensive definition of the civil service of the state for that year.
	(4) The First Minister for Scotland must lay before the Scottish Parliament any report under subsection (2) that covers civil servants that serve the Scottish Executive.
	(5) The First Minister for Wales must lay before the National Assembly for Wales any report under subsection (2) that covers civil servants that serve the Welsh Assembly Government.'.- (Mr. Maude.)
	 Brought up.
	 Question put, That the clause be added to the Bill.
	 The House divided: Ayes 187, Noes 295.

Question accordingly negatived.
	New Schedule 1
	
		
			 'Crown employment: repeals and revocations 
			  Title and reference  Extent of repeal or revocation 
			 Aliens Restriction (Amendment) Act 1919 (c.92) Section 6. 
			 Aliens' Employment Act 1955 (4  5 Eliz. 2 c. 18) The whole Act. 
			 European Communities (Employment in the Civil Service) Order 1991  (S.I. 1991/1221) The whole Order. 
			 European Communities (Employment in the Civil Service) Order 2007  (S.I. 2007/617) The whole Order.'. 
		
	
	-( Mark Tami.)
	 Brought up, and added to the Bill.
	 The Chairman left the Chair to report progress and ask leave to sit again (Programme Order, this day.)
	 The Deputy Speaker resumed the Chair.
	 Progress reported; Committee to sit again tomorrow.

Business without Debate
	  
	Delegated Legislation

Mr. Deputy Speaker: With the leave of the House, we shall take motions 4, 5 and 6 together.
	 Motion made, and Question put forthwith (Standing Order 118(6)),

Regulatory Reform

That the draft Legislative and Regulatory Reform (Regulatory Functions) (Amendment) Order 2009, which was laid before this House on 20 July, be approved.

Value Added Tax

That the Value Added Tax (Buildings and Land) Order 2009 (S.I., 2009, No. 1966), dated 21 July 2009, which was laid before this House on 21 July, be approved.

Dangerous Drugs

That the draft Misuse of Drugs Act 1971 (Amendment) Order 2009, which was laid before this House on 19 October, be approved.  -(Mark Tami.)
	 Question agreed to.

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Common Fisheries Policy Reform

That this House takes note of European Union Document No. 8977/09, Commission Communication on the Green Paper-Reform of the Common Fisheries Policy; and supports the Government in working with the European Commission to improve the governance framework of the Common Fisheries Policy, thereby contributing to the delivery and maintenance of sustainable fisheries. -(Mark Tami.)
	 Question agreed to.

Regional Select committee (West Midlands)

Resumption of adjourned debate on  Question (2 November ),
	That Mr David Kidney be discharged from the West Midlands Regional Select Committee and Mrs Janet Dean be added.

Hon. Members: Object.
	 Debate to be resumed tomorrow.

REgional Select committee  (South West)

Resumption of adjourned debate on Question (2 9  Octob er ) ,
	That Linda Gilroy be discharged from the South West Regional Select Committee and Roger Berry be added.

Hon. Members: Object.
	 Debate to be resumed tomorrow.

PCSOS (SOMERSET)

Motion made, and Question proposed, That this House do now adjourn. -(Mark Tami.)

Jeremy Browne: Before I get on to the main substance of the debate, this is a fitting opportunity to pay tribute to a police officer, Sandy Padgett, who died only last month. She was a thoughtful, intelligent police officer who was the senior officer responsible for the half of Somerset within which my constituency lies, covering Taunton Deane, Sedgemoor and west Somerset. She died very unexpectedly at the tragically young age of 41, and her loss is still mourned and noticed not just by police officers but by people in all walks of life in my constituency and across Somerset.
	The context of the debate is a decision by the Conservative-controlled executive at Somerset county council to reduce the budget for police community support officers, with effect from April 2010, by £129,000. Before I get into the details of precisely what arrangements are planned and why I feel so strongly that we should resist the budget cuts, I shall paint a background picture of why this is a matter of wider concern for people living right across Somerset.
	Like people everywhere else in the country, my constituents are affected by violent serious crime, but it is fair to say that that is not the typical everyday experience of most people in most communities in Somerset. What causes a great deal of anxiety for those people is more routine-some people would describe it as lower-level-crime and antisocial behaviour, which often blights their lives. It is things such as graffiti, litter and late-night noise that make people feel that their quality of life is compromised. That public concern is real, and it is the responsibility of all interested parties-political parties, the police, local councils and others-to address the anxieties that my constituents and those of other Somerset Members feel.
	Various councils and interest groups have put in place good arrangements to try to address those anxieties about lower-level crime and antisocial behaviour. Even before I was elected there was a good scheme of wardens in a large village in my constituency called Bishops Lydeard. They had a distinctive uniform and were visible out on patrol in their community. Similar schemes operated throughout Somerset and throughout the country, a lot of them under the auspices of local authorities rather than the police. The decision was taken, on balance rightly, to bring all those disparate groups and different efforts to address public concern under one umbrella and make them part of the overall police family. That was the genesis of the idea of PCSOs.
	Last Friday I spent, as I have many times in the past, a half day out on patrol with the police in certain areas of Taunton-Holway, Halcon, the Lane estate, Priorswood and Lyngford. In all those areas, I was particularly interested to observe how well police neighbourhood teams are working in their communities. They have been a success in many parts of the country.
	People often say to me, Well, I'm not sure about community support officers, because I'd like to see more real fully-fledged police. Everyone would recognise-it is a statement of fact-that there are more police officers than there were 10 years ago, and I do not want PCSOs to replace the regular police officers or be a substitute for them. However, they can play a complementary role as part of neighbourhood teams. That is what I have observed in Taunton and elsewhere: police have worked closely in conjunction with PCSOs and the different roles have made them a more effective and responsive force as a consequence.

David Heath: I congratulate my hon. Friend on securing this debate. As a former chairman of the Avon and Somerset police authority, I am delighted that we have had more police officers in Avon and Somerset recently, although I must say that that is now in decline: we are losing officers, and have fewer now than we had a year or two ago. However, PCSOs are playing an essential role in supporting our police officers. They not only provide a uniform presence in many of our villages, but in towns such as Frome, they form a very strong bond with local young people, and work in a way that is simply not possible with modern policing. PCSOs nevertheless provide a complementary service, exactly as my hon. Friend says.

Jeremy Browne: I completely agree with my hon. Friend. Perhaps I can break down the role of PCSOs as part of the neighbourhood teams into three categories. The first role is visibility. How many times have we heard-not only in towns, but in small villages and more remote populated areas-how much people value having a visible police presence on the street? People often complain that they do not see the police, or that the police do not properly engage with them, so the uniformed presence of PCSOs is valued by a great number of people.
	Secondly, PCSOs can play a role in ensuring that the function of the police reaches down to community level-for example, by holding regular advice surgeries in community centres, or by visiting victims of crime or people who have made complaints about the level of police activity in their area and talking to them about their concerns. They might go and see older people and advise them about home security, or visit primary or secondary schools to talk to children about crime and police-related matters.
	Outside the Asda store in Taunton there is what is called a police pod. The public can drop in to that and do not have to go to the length of visiting the main police station. There they can get some advice on security-making their house, car or bike safer-or report a crime to the police or the PCSOs. In all those different ways, PCSOs, precisely because they are not engaged in dealing with criminals in the same way as police officers are, can spend more of their time out on the street, in the community, visible, at the same time as having those regular community functions.
	The third role of PCSOs is something that often surprises people, because it sounds slightly counter-intuitive. Quite a lot of police time is spent on activity that is not to do with combating criminal activity. For example, the police might be asked to help divert traffic following a road accident, but PCSOs are perfectly capable of performing that task, ensuring that more regular police officers are not taken away from other tasks. Somerset MPs know that at this time of year carnivals are very popular, and PCSOs have a role in ensuring that public safety is maintained when thousands of people come on to the streets to enjoy such community events.
	I remember once going on patrol with the Taunton town centre PCSOs. A child was lost, having turned round to find its parents gone during a shopping trip. Understandably, the parents were panicking. PCSOs, through their radio links and co-ordination with the CCTV operators, were able to locate the child and reunite child and parents. No criminal act had been committed. Some people would want the police out and about catching criminals, not performing that type of function, and PCSOs are ideally suited to such work.
	To summarise, people value the visibility of PCSOs and like them as part of a neighbourhood team with the regular police; and the police can have greater flexibility and perform more of a community role as a result of PCSOs working in concert with them. But because of the historic funding legacy-the PCSOs were brought in under the police umbrella but were not originally part of the police family-it has been recognised for some time that councils and others contribute to their funding. An agreement was made in 2008 between Somerset county council, Sedgemoor district council and Taunton Deane borough council to make a contribution to the funding of PCSOs in partnership with Avon and Somerset police. Sedgemoor and Taunton Deane have much smaller budgets so their contributions were relatively modest, at between £20,000 and £30,000 annually. However, Somerset county council agreed an annual contribution of £418,000, a substantial sum. Between them, the councils were funding an additional 17 PCSOs to work with local communities across Somerset.
	At the time of the agreement, the spokesperson for Somerset county council said:
	These three Councils have funded PCSO's because they recognise the improvements to community safety which can be achieved by PCSO's working at a local level.
	That is precisely the type of activity that I have mentioned, and the council cited others, including making our communities feel safer and reducing antisocial behaviour; reducing crime; limiting the damage caused by alcohol to our communities; preventing young people from entering the criminal justice system; safeguarding vulnerable people; and improving safety on Somerset roads. So the undertaking was given by Somerset county council and others to maintain funding to achieve those objectives.
	It is in that context that I was genuinely shocked to discover that the new administration at Somerset county council had decided to make a cut of £129,000 in the budget for PCSOs from April 2010. That is a cut in the existing budget contribution of almost a third.-

David Laws: I congratulate my hon. Friend on securing this important debate. He will know that the Conservatives in Somerset have been alleging that the plan to reduce PCSOs is only a plan, but is he aware that papers that went to the council's cabinet this week talk of the reduction in PCSO support essentially as a done deal, and already take it into account in plans for the future? Is that not a concern?

Jeremy Browne: It is very much a concern for me. I would not want anyone to think that this claim had been invented by me or other Liberal Democrats. As my hon. Friend rightly says, it is a concrete plan put forward by the Conservative administration of Somerset county council. Further confirmation is provided by the fact that, in an expensive local newspaper advertisement, the prospective Conservative parliamentary candidate for Taunton Deane said that he supported me in opposing the cuts being proposed by the Conservatives on Somerset county council. That appears to offer complete confirmation that those cuts are in no way fictitious. If they were, he would not need to support my campaign against his colleagues at county hall.
	We had county council elections in June this year, so they were only a matter of months ago. People might have been entitled to expect that if there was a plan to cut the county council contribution to this important police community support work by almost a third, it would have been one of the issues that we discussed, in a grown-up and sensible way, at that election. The Conservatives could have said, Here's our plan to slash the budget for PCSOs, and we could have had a debate about whether that was a good plan. The Conservatives clearly thought that people in Somerset would not be keen on the idea, which is why it was kept secret during the election campaign.
	There has been no meaningful consultation. I do not know whether my hon. Friends the Members for Somerton and Frome (Mr. Heath) and for Yeovil (Mr. Laws) have also received letters from Somerset county council asking for their views on whether that would be an appropriate course of action in the communities that they represent in Parliament. However, I am not aware of any meaningful consultation taking place.
	Public opinion, in my view, is strongly against the proposal. I would not claim, of course, that there is 100 per cent. opposition to what has been suggested by the county council. However, I decided to try a modern form of communication and set up a Facebook group to try to oppose the changes. Almost 1,000 people have signed up to the group in the past few days alone, and a few of them have posted comments. Let me give hon. Members a flavour of them. Phil Hobson said:
	Our PCSOs do a great job collecting 'on the street' intelligence for the police and can talk to young people better than regular officers. I know this from personal experience-we always see them walking the beat and they have defused several...incidents-
	that is, antisocial behaviour incidents-
	as well. Wouldn't know what to do without them.
	Danni Sowden wrote:
	our PCSO is very good, helps our village become a nice area and stops trouble!
	Angie Leach said:
	Well done and good luck. The PCSOs here have proven their value to the community over and over again!
	Helen Gould said:
	To cut back on PCSO funding now would be a very unhelpful step back in the fight to provide safer, quieter communities for us all to live in. It would undermine and undo all the good work these hard-working and conscientious minded individuals have achieved.
	Tony Gore said:
	Nothing beats 'presence' as a deterrent, and in country areas any form of policing is better than none.
	Andy Newland said:
	I am a fan of PCSOs on balance they have been good for our communities.
	That is the type of feedback that I have been getting from people who are extremely concerned about the budget cuts proposed by the county council.
	I understand that all local authorities, and indeed central Government, face difficult budgetary issues. We are in a situation in which decisions will have to be made, and sometimes those decisions will not be popular. However, we must remember that the county council has just spent almost £50,000 on advertising to recruit a new chief executive. That, for me, represents an extraordinary priority, given that the budget for PCSOs is being cut. If the Conservatives in the council had decided that they would rather have a lower budget, they would, as I said, have been well-advised to put that proposal forward at the elections a few months ago.
	In conclusion, my desire is to support the neighbourhood policing teams. They work extremely well and ensure that the police continue to have a high level of visibility in communities across Somerset. Those teams of regular police officers and PCSOs work in concert. It is my view-I hope that it is the Minister's as well-that a cut of £129,000 in the annual Somerset county council contribution to Avon and Somerset police to fund PCSOs would be a backward step. It would make the public's understandable concerns about crime in Somerset all the more acute. I look forward to hearing his comments, therefore, and I hope that he will join me and say how strongly committed he is to neighbourhood policing. I hope, too, that he will give a clear steer that this House is uneasy about the cuts proposed by the Conservative administration at Somerset county council.

David Hanson: I am grateful to the hon. Member for Taunton (Mr. Browne) for securing this debate, and I congratulate him on it. I am also grateful to his hon. Friends the hon. Members for Yeovil (Mr. Laws) and for Somerton and Frome (Mr. Heath) for supporting him this evening. I also thank the hon. Member for Taunton for his kind comments about our police colleague, Sandy Padgett, who, as he mentioned, died recently. His comments will be of comfort to those who knew her and her work in the Somerset area.
	I know that the hon. Member for Taunton has taken a keen interest in the matter before us, and I have been following the press discussions with interest. He made an excellent case for the work of community support officers not just in Somerset but throughout England and Wales, and for the support that they give to police officers in dealing with antisocial behaviour, community policing and ground-level activities that are crucial to confidence in police services throughout Somerset and elsewhere.
	The amount of funding that Somerset county council gives to support Avon and Somerset police on such matters is-I hope the hon. Gentleman will recognise-a matter for Somerset county council. I cannot be, nor would I wish to be, the leader or the executive of Somerset county council; nor can I account for the administration that currently runs it. I hope that the hon. Gentleman will recognise that the support given to PCSOs in Somerset remains a matter for local discretion. Later I will give some views and flavours about those decisions, but they remain a local matter.
	The key point that has been put across today is that PCSOs have a vital role to play in neighbourhood policing. If I look, as I did only an hour ago, at the figures for the west Somerset basic command unit, which covers the hon. Gentleman's constituency, I see that there are clear advantages in driving down crime to be gained from police and police community support officers working together. Indeed, crime in the area that the hon. Gentleman represents has fallen by 6.2 per cent. over the past year, with vehicle crime falling by 22.4 per cent. If I may make a plug, Mr. Deputy Speaker, I got those figures from the crime map that we launched a couple of weeks ago which shows the position in every area and BCU area.
	As part of the policing pledge, we want such engagement with the community. The hon. Gentleman made a strong case for the synergy between PCSOs and neighbourhood policing in driving down crime and increasing confidence. Indeed, confidence in policing has increased, and not just in Somerset but across England and Wales, from 45 per cent. a year ago to a record 50 per cent. in the last British crime survey two weeks ago, our target being 60 per cent. in the near future.
	That will have something to do with the record numbers of police officers in Somerset and elsewhere-Somerset now has 3,303 formal police officers, which is 314 more than in 1997-but it will also have a great deal to do with the focus of PCSOs, working alongside police officers, on tackling lower-level, but highly visible antisocial behaviour and other issues of high concern for the community at large. One of the main themes of the policing White Paper that we will bring forward shortly will be strengthening and embedding that role further, because it is only through effective partnership work between the police and police community support officers, working alongside councils such as Somerset and Taunton Deane, that we can make a difference on the ground.
	Funding is a key issue, but let me give some context. The Home Office is providing some £332 million to police authorities in the current financial year to support neighbourhood policing. That constitutes 70 per cent. of the funding for some 16,000 police community support officers nationwide. The Home Office now provides some £7.16 million of support for Avon and Somerset constabulary to ensure provision of 346 PCSOs, who are funded this year by that direct grant from this Labour Government. There are 381 PCSOs in Avon and Somerset constabulary overall. The difference between those figures-346 and 381-is because of funding such as that provided by Somerset county council and other agencies. Home Office funding increased last year by 2.7 per cent. and by a similar amount this year. In 2010-11, for the last year of this comprehensive spending review, we are committing to ensuring that that central Government support to fund the large bulk of PCSOs is in place for the future.
	Whatever the decisions of Avon and Somerset police authority or Somerset county council, this Government have a commitment to continue supporting PCSOs. The 346 PCSOs funded directly by this Government were funded last year, will be funded this year and will be funded next year, pending the CSR, which will take place after the general election whatever the outcome. That funding for neighbourhood policing is a central part of our partnership approach.
	For me personally, match funding and community buy-in to PCSOs are extremely important. That is why I have welcomed past commitments made by local authorities in the Avon and Somerset area to supporting those additional community support officers. I think that they represent very good value for money given the activities that they can undertake to prevent crime, build confidence, support communities and help to reduce crime on the ground. Partnership in policing is extremely important. If it does not exist, and if crime rises, local authorities such as those in Somerset will have to suffer the consequences, including more social dysfunction and difficulties on the streets. Those issues would affect the future budget headings of places such as Somerset.
	The 11 neighbourhood police beat teams that operate in the Taunton constituency, and the PCSOs who support them, are extremely valuable in helping to drive down crime and, ultimately, reduce the burden on ratepayers as a consequence of that crime downstream.
	Against that background, I share the hon. Gentleman's concern that Somerset county council is considering a reduction of some £129,000 in it funding for PCSOs from 1 April 2010. Like him, I have seen the newspapers and heard what colleagues representing other parts of Somerset have said about the fact that this is still a plan in progress. That is a matter for the council, as I have said. I was interested in what the hon. Member for Yeovil said about the cabinet papers, but I have to say that this is a decision for the council. I would, however, be disappointed-as would Avon and Somerset police-if that cut took place.

David Heath: A point has just occurred to me, and I wonder whether the Minister can help me with it. If, as a result of this quite disgraceful decision by Somerset county council, PCSOs were laid off and made redundant, would the cost of those redundancies fall on the police authority? Would not that reduce yet further our ability to police Somerset properly?

David Hanson: My understanding is that it would, because those PCSOs would be employed by the police authority rather than the county council. I will check on that, however, and if need be, confirm it or otherwise after the debate.
	I want to put this matter into context, because it is a serious issue relating to Somerset county council's contribution. I would be disappointed if it were to reduce that contribution. I know that the police authority would also be disappointed. I need to put this into context, however, because the £129,000 would equate to about 4.5 PCSOs from the present Avon and Somerset contingent of 381-346 of whom are funded centrally by the Home Office. So, while this is an important issue, I would not wish people in Avon and Somerset to think that the decision would lead to the loss of PCSOs on the ground in Somerset, or indeed in Taunton. The Home Office is committed to that funding and will continue that funding. We will ensure, as we have done to date, that the 346 are in place for the future.
	The Avon and Somerset force faces considerable challenges to meet its joint police and local authority public confidence target, which is currently at 46 per cent., rising to a final target of nearly 60 per cent. by March 2012. The PCSOs will be a considerable factor in achieving that, and they will have a particular role to play in that regard. Any reduction in their numbers, outside the Home Office contribution, would be regretted, but I have to emphasise again that that is a matter for Somerset county council, and I hope that it will take on board what has been said in the House this evening.
	I know that the hon. Member for Taunton has collected a number of signatures to his petition, and I am extremely impressed by his use of Facebook. My constituents try to impress on me the importance of this modern technology, and I hope that, at some point, I shall reform and be able to respond in detail. It shows that there is a strong level of support for these issues in Taunton and in the rest of Somerset, and I will undoubtedly take a keen interest in how the situation unravels in due course, and in what Somerset county council does to support Avon and Somerset police in delivering reduced crime and improved confidence. I congratulate the hon. Gentleman, and I hope that the debate will have been of use to him.
	 Question put and agreed to.
	 House adjourned.